ShareThisPre-opening Comments for Thursday August 26th
U.S. index futures are higher this morning. S&P 500 futures are up 5 points in pre-opening trade. Index futures responded favourably to the weekly jobless claims report. Consensus for jobless claims was 490,000. Actual was 473,000, down 31,000 from last week’s revised figure.
Traders are waiting for news from the annual Jackson Hole Symposium sponsored by the Federal Reserve and attended by Federal Reserve officials and leading economists. Federal Reserve chairman Ben Bernanke is scheduled to address the symposium tomorrow. Nouriel Roubini noted this morning that chances of a “double dip recession” have increased to 40% as growth in the U.S. economy slows.
Canada’s banks reported mixed third quarter results this morning. National Bank reported higher than expected adjusted earnings. Royal Bank reported lower than expected adjusted earnings. Consensus was $1.02 per share. Actual was $0.87. Royal Bank is down 3.5% in pre-opening trade.
Dell increased its offer for 3PAR from $18 to $24.30 per share. The offer exceeds Hewlett Packard’s offer at $24.00. 3PAR has accepted the Dell offer. 3PAR traded lower on the news because Dell’s offer is below its current price.
Technical Action Yesterday
Technical action by S&P 500 stocks remained bearish yesterday. Two S&P 500 stocks broke resistance (Campbell Soup and Lourillard) and 13 stocks broke support (Apple, Amersource Bergen, Bank of New York Mellon, Consolidated Energy, Compuware, MetLife, Northern Trust, Ryder, Schwab, Time Warner Cable, U.S. Steel and Yahoo. The Up/Down ratio dipped from 0.65 to (156/247=) 0.63.
Technical action by TSX Composite stocks was mixed. Six TSX stocks broke resistance (Agnico Eagle, Eldorado, Primaris REIT, Red Back Mining, Silver Wheaton and TransCanada) and four broke support (Bombardier, Imperial Oil, Provident Energy and Thomson Reuters). The Up/Down ratio improved from 0.65 to (156/247=) 0.63.
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
Gold stocks dominated the list of breakouts by TSX stocks yesterday. Other key stocks in the sector are close to breaking resistance (e.g. Barrick Gold). Not surprising, the TSX Gold Index also is testing resistance and appears poised to move higher. ‘Tis the season for the gold equity sector to move higher!
Energy stocks on both sides of the border were notably on the list of stocks breaking support. Most recovered by the close. The TSX Energy Index and related ETFs broke support levels in early trading.
Since launch of XEG, seasonal influences in August and September have not been positive.
U.S. Technology stocks were notable on the list of S&P 500 stocks that broke support. Weakness was triggered by early weakness in Apple. Apple recovered in late trading after breaking support.
Financial SPDRs were the first sector SPDR to break below their July 1st support level. Bank of New York Mellon led the sector on the downside.
Media reports suggest that negotiations between Genzyme and Sanofi Aventis are “going hostile”. Genzyme responded accordingly and the biotech sector recovered in late trading.
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9th Annual World Alternative Investment Summit Canada 2010 |
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Recently added as a Keynote Speaker for our 9th Annual World Alternative Investment Summit Canada 2010 Lawrence McDonald – Author of “A Colossal Failure of Common Sense – the Inside Story of the Collapse of Lehman Brothers”. Published by Random House in July 2009, and hit the New York Times bestseller list in its first week. It is now one of the bestselling business books in the world, translated into 12 different languages. Lawrence joins Harry Markopolos and Richard Bookstaber to complete this must attend 3 day event. |
FP Trading Desk Headlines
FP Trading Desk headline reads, “The bears should listen to the market”. Following is a link to a report written by Leon Tuey, a well respected veteran technical analyst:
http://business.financialpost.com/2010/08/25/the-bears-should-listen-to-the-market/
FP Trading Desk Headline reads, “Buy copper once it hits U.S. 6,200 a tonne: UBS”. Following is a link to the report:
http://business.financialpost.com/2010/08/25/buy-copper-once-it-hits-us6200-a-tonne-ubs/
Editor’s note: Copper inventories are trending lower. This trend is expected to continue because demand is rising (particularly from China) and additional production is constrained. The seasonal trade starting in November is starting to look interesting this year.
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1 Year LME Copper Warehouse Stocks Level |
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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
HAC Seasonal Rotation ETF HAC $11.09 August 25th 2010
· Open 11.06
· Close 11.09 (Up $0.02)
· High 11.09
· Low 11.06
· Bid 11.08 x20
· Ask 11.14 x4
· Volume 3,100
· 52-week High 11.37 06/03
· 52-week Low 9.44 02/05
· Beta 2.29
· Net Asset Value per unit: $11.05 (Up $0.03 to an all time high)
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Discussions from the Tech Talk Forum:
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August 26th, 2010 at 1:48 am
Hi Don/Ron
Is the next Resistances for ABX 47.99 & 48.99 & is there a support before the 50dma.
Also what is the next resistance & support for TRP.
Thanks
Muntazir
August 26th, 2010 at 5:37 am
Muntazir:
I follow TRP extensively and have had a large holding for years. For TRP I see support at 32.60 and resistance at 37.51. There are a number of short term bullish events in the last week: some short term moving average bullish crosses and MACD crosses the signal. I am in TRP for the long haul however and don’t trade it (due to rising dividends my yield is now over 7%).
August 26th, 2010 at 6:58 am
Hi Ron/BC
What is your opinion on Manulife?
Thanks
Marlene
August 26th, 2010 at 7:30 am
Hello Don
Thank you for your chart on the seasonality of XEG-T. This August has certainly been horrible for energy stocks. Do you see this downtrend continuing, and is the seasonal double bottom in mid-OCT and mid-NOV for XEG-T still a likely scenario?
Thanks for your time
Jeff
August 26th, 2010 at 7:49 am
Marlene: MFC is in a severe bear market. Even the fundamentals are bearish not just the chart pattern. Price has little to no support all the way to 9 with some support at 10.75 but one would be reaching for straws counting on that. Right now price would need to cross above 12.20 to suggest some type of low in in place. Overall price is very oversold and without being an expert on company values I would think it’s breakup value would be worth more than present price. But that doesn’t change much. Bottom line: price needs to clear 12.20 and hold above that price to expect to see any light at the end of this tunnel and a rally back to any degree. If price can mount any type of rally the next significant resistance is 14.40. That is both the price resistance level and the downtrendline.
August 26th, 2010 at 8:20 am
Hello Don,
Hope you had a good vacation. Thank you for bringing back your daily advice.
Can you please give me your TA support/resistance and perhaps comment on whether you expect to see SLV break above resistance ? In my view its been in a range, but do you see a possible breakout of this range or do you think range trading will work ?
Thanks,
Richard
August 26th, 2010 at 9:15 am
Hi Ron/BC
Great call on SLW. Where is the next resistance point for this and could it go through that as well seeing that we are in a seasonally strong period for PMs?
August 26th, 2010 at 9:55 am
Roy: SLW has been outperforming most all precious metal markets including GLD, XGD, SLV, ABX and most everything else for years now “consistently.” This is unique as XGD, GDX, HUI, ABX, G and most every other Gold stock has underperformed Gold for years now if you look at ratio charts. In fact if you look at a chart of the HUI Gold Stk Index relative to Gold it has been falling harder and sharper since 2003. There is a 7 year downtrendline and a steeper 4 year downtrendline and even steeper 3 year downtrendlie. I track these ratios. Since early 2010 there has been some improvement with the ratio but is still in a long term multi year downtrend of underperformance. That ratio is now bumping up against the more recent 3 year downtrendline since early 2010 and trying repeatedly to clear it all year. That is a key one to watch. It does look more serious this time up. SLW has been outperforming Gold and the HUI Index since the Nov/08 Gold stock lows with a perfect uptrendline on the SLW/GLD ratio chart. On the Daily price chart price has just cleared 22 with a bullish breakout pattern into new record highs. But it is also entering overbought territory with some negative divergences showing. That can continue with a rising price to a point. Long term indicators I use are still bullish. Bottom line: price must hold above the 22 breakout pt to now serve as support. The breakout suggests a run to 25-26. What to watch is how far price runs above its 50ema. Price is like an elastic band tied to the 50ema and when stretched too far snaps back to it. Just look at a chart and see how often price returns to the 50ema and keep it in mind. Seasonals are positive as well. Perhaps trailing stops on the way up might work well.
August 26th, 2010 at 10:38 am
Good morning Ron, another day, another dollar… or more like “another day, another battle”. So far this morning I sold TCK and SPM right before markets cooled off (made about 5% since yesterday’s lows). What’s not doing well are SNDK and RIM. I’m starting to get more and more worried about RIM short term with its repeated break below $50. I have a lot invested in it at an average cost of $58 or so… did not expect this at all.
Overall tech sector is continuing to struggle – shrinking P/Es, etc.
I’m thinking of picking up some HGD for a quick trade… perhaps.
August 26th, 2010 at 11:07 am
Slava: RIM is still trying to hold onto the 50 support area. Price support and resistance are not exact decimal numbers and need to clear or break “decisively” for other traders to throw in the towel regarding support and cover shorts above clear resistance levels. Until RIM clearly breaks 50 it is still hanging in there.It is also showing strong positive divergences at this level. But more importantly price is in a steep downtrend. If it was a dip in an uptrend I’d have bought a whack of it at 50. Big difference between uptrend and downtrend as positive divergences showing technical strength are not as strong as the price trend. If RIM clearly breaks 50 the next and last significant support level is 45 which is the late 2008 and Marh 2009 lows. That’s all I see here with this. And HGD (double bear gold etf) is breaking below 11.45 support. Gold looks very toppy to me here with far too much attention on it. But it could still run to a double top of 1267. The HGD is the bear Gold Stk ETF not Gold and if you look at the TSX:XGD Gold stk Index you’ll see price tagging major long term price resistance at 24. This is the long term high area going back to 2008 and is major resistance. And note the Gold price then was 1034 and is now 1240. The HUI and GDX are not at long term resistance though. Mixed bag there.
August 26th, 2010 at 11:29 am
Hi Slava,
You sold SPM, I thought it is a long term buy? Any comments are welcome.
Sunny
August 26th, 2010 at 11:33 am
Slava: Looking at the Equity Clock site on seasonals Technology has most bearish time period from late Aug to early Oct. RIM on the other hand historically has been in a consistent uptrend other than a dip from mid July to mid Aug. But RIM is not the bell of the ball anymore with APPL stealing the show. RIM’s latest achievement was greeted with a yawn with everyone talking about APPL’s achievements. RIM couldn’t close above 1st resistance at 51 yesterday or today which is bearish as 51 and 52 were minor resistance pts. Does not look positive. Something to keep in mind during the day is they claim (whoever they are) that the Open price is created by Amateurs, the Low of the day is created by Bears, the High is created by Bulls and the close is created by Professionals. This makes sense as often you’ll see price clear resistance or break support only to come back into its original price area without breaking out or breaking down. This is often referred to as price bars with long tails. Always watch the closing price especially as those are the professionals ending their day after playing with everyone else. A line chart is closing prices only and I often look at that when regular bar charts look too “busy”. It does give a different perspective.
August 26th, 2010 at 11:33 am
Sunny, I’m keeping some SPM long-term and I trade some in another account from time to time. I only sold the portion which I bought yesterday morning and the day before at $0.67. In this market, +8.95% in 1-2 days is a pretty good return.
August 26th, 2010 at 1:36 pm
Hi Ron/Bc,
Do you think HOU is a good time to buy in this level or any comments?
Thanks
August 26th, 2010 at 1:48 pm
Hi Don,
Any playing HND for last month is up 50%? Is it time to start trading in Nat Gas via HNU or GAS?
Thanks,
Sunny
August 26th, 2010 at 2:33 pm
Sunny,
Unless you plan to daytrade HNU, I would stay away from it if I were you. Last August I had a very painful experience with HNU. When I bought HNU late last August, natural gas was priced well below the current price…. yet it kept falling after I bought it, every day, big % drops. Do you know that it actually bottomed in Sept. 2009 around $2.30 or smth like that? I hedged my position with hnd a few times which lessened the blow yet I still managed to come out with an overall loss and A LOT of stress and regret in the process. Since then I played HNU during the fall/winter a couple of times (only as 1-2 day holds maximum) and it turned out okay.
August 26th, 2010 at 2:38 pm
Thanks Slava,
Is there any etf for forest products or equities?
August 26th, 2010 at 2:39 pm
Ron, thank you again for taking the time to respond to my questions. Do you mind me asking if you took any positions in the market so far this week? Just curious.
August 26th, 2010 at 2:53 pm
Sunny,
As a matter of fact I just bought shares of WEF (Western Forest products). Probably a good buy at $0.29. Mind you, it has very low volume and is quite volatile, however pretty good outlook. As for an etf which covers forest products – I don’t know any.
August 26th, 2010 at 3:20 pm
IMO the forest products sector is the probably most attractive sector going forward… as it is so oversold, out of favor, hated by investors, bleeding red ink…. but primarely geared to a US economic recovery… many have shut down so many mills and laid-off so many people that when the recovery does take place, they will not be able to supply the new demand for lumber…. lumber prices will rise quickly and so will the shares…. but these things will smell the recovery way before it actually happens…. got to be there before it moves.
As Gretsky once said, skate to where the puck is going to be, not where it is.
My favoved pick is Canfor as I have traded this one for many years successfully… very good bet last winter. In addition, I like the principals involved (Jimmy Pattison, etc.). These guys are rarely wrong. Long term a good sector to keep an eye on and trade in and out of.
Summer time is down time when mills do maintenance… season coming up soon. I’m waiting for a re-entry point.
August 26th, 2010 at 3:22 pm
Slava: Well I often wonder what good any comments will do as each of us has a different style and time frame and risk tolerance. I recall meeting with a bunch of traders in the fall of 2000 thinking we could put it all together with such diverse experiences. We might as well have all spoken different languages with our different views on trading and indicators and risk levels and account types and sizes. So I’m not sure any ideas are that helpful to be honest other than sound basic principals I follow myself. But no I haven’t taken any positions this week. Looks like a turning point in many markets but I do expect a sizable rally before any major sell off and very soon. A good news story is about to hit to trigger a rally I think. Far too much bearishness out there. That is what I’m waiting for along with any tag of “major” support level. I’m more of a sniper than gunslinger. And I tend to buy 1000 shares at a time and don’t hold losing positions. What is troubling is my concern about switching from Can$ to U.S. I spotted a few key turning pts over the last few months and would have done great but ignored the signals. And I don’t normally ignore technicals as that’s what I use almost exclusively to trade. That has been my best market to trade for a couple of years now. Makes a huge difference trading stocks and ETFs too as when in U.S.$ I only look at and trade U.S. markets. I really don’t like trading the TSX with it’s Mickey Mouse volume and small list of stocks.
August 26th, 2010 at 4:29 pm
Ron, very true… every investor has a different strategy. My biggest problem is that up to now I haven’t used much of technical analysis when making investing decisions. I’m more of a macro person – seasonality, “buying shares in a good company when they look undervalued”, buying stocks based on company’s management, etc. This strategy used to work but not so much lately since investing has become more and more of a computer game, has it not? Last week the market valued SNDK at $45 and now at $35 without any changes in material info. One analyst rates RIM as a buy with a $92 target while another rates it a sell with a $47 target. Very few things make sense like the recent rise in USD.. run to safety? What safety can one find in USD at this point? A handful of investment houses pull most of the “market strings” and we just have to live with the circumnstances. Well, I’m still “in the game” but only with money I can afford to lose. If I were 30 years older than I am now, my strategy would be totally different because my portfolio size would probably be much larger than it is now. I almost feel sorry for the wealthy people with cash to invest. Most of them must feel very worried about managing (and preserving) their wealth.
August 26th, 2010 at 6:53 pm
Slava: Early in my trading life I got tired of being lied to by hot shots with agendas so don’t trade on brokerage “stories”. You have to wonder about their reports when they have taken large positions on the stocks themselves. Sometimes short as well! I got into charts and studied technicals in the late 70′s and saw things much clearer. I use technicals with everything. A chart reflects all known and presumed realities and charts a pattern of bullish or bearish design. And yes computer programs are controlling much of the markets daily. Sentiment is also very important and not covered well. The reason is when most everyone is bullish they have committed their funds and there is little fire power left to increase prices from that point that is now reflecting that high level of bullishness. And visa versa when bearish. It is very valuable info at extreme sentiment numbers. Then add to that seasonality which is the measurement of true fundamentals not financial reporter’s nonsense. The seasonal trend does vary and needs to be watched for changes in time and effect as the fundamentals do change and can be at extremes as well. Like NG for example with an abundance of supply due to new methods of extraction. So any one thing isn’t the holy grail. Technicals, sentiment, seasonals with confirmed fundamentals are put together like this site does and you have a better chance of success than any one of them. I always track the U.S.$ closely as it has a profound effect on markets. This last year it has had an odd relationship with the stock market, Gold and CD. Not inverse all the time anymore. Keep in mind the U.S.$ is the world’s reserve currency and big money will always find safety there as there is no where else to run other than Gold. So they often run together when fearful. The Euro has lost it’s status as a reserve currency with it’s financial issues. But 90% of my decisions are based on the charts. The rest is worth paying attention to but won’t trump the chart as it is already reflecting all known and believed data by all traders. Don’t worry about the wealth old fat cats. They tend to have their money in less risky markets as they don’t have to take chances anymore. And they have connections the rest of us don’t have………..
August 26th, 2010 at 7:11 pm
Jennifer: Just saw your short post. As far as HOU goes it is a double bull Crude ETF and you won’t find many people recommending them due to the downward bias they have with the way they are calculated. But technically price did bounce off a double bottom support yesterday at 5.30 which was the May lows. And there were positive divergences on the double bottom. Price was up again today with the entire price range today above yesterdays. Price closed today at 5.70. The price chart looks good. Technically one would buy near the 5.30 area if possible with a stop loss a comfortable distance below if price breaks down below 5.30 support. But this double thing can sure put the odds against you. Then again it does have firepower. There is resistance around 7.00. Seasonals are still bullish right through Sept.
August 26th, 2010 at 7:26 pm
Hi Jeff. Best to wait for a seasonal opportunity in XEG in mid November.
August 26th, 2010 at 7:50 pm
Don:
Equity Clock shows Seasonal Secondary sectors by Brooke Thackray Gas Aug 1—-Dec 21 but the Charts recommend to buy in Sept 2 sale Oct 20, the chart is clearly better from September on. So does the gas season starts in Aug 1 or Sept 2. This year I bet is on September. I also do not understand how the month end rollover of contracts and weekly storage reports affects the HND and HNU ETF’s. Today storage reported increase of 3052 bcf +40 versus estimated +44 and HND Open 8.27 High 8.70 Close 8.57 continued the bear trend. Lin is up a lot from 5.6 on August 3rd, the trend is your friend…
On Gold thanks to your signal bought SLW in early August and more today at the open, John Embry gold manager in Sprott fund recommended SLW on BNN last January, he also liked AXR Alexco Resources that jumped 15% today, any opinion on AXR?
This are the gold stocks on Sprott gold fund
1 Barrick
2 Osisko Mining Corporation
3 Silver Wheaton Corp.
4 Guyana Goldfields Inc.
5 Wesdome Gold Mines Ltd.
6 Colossus Minerals Inc.
7 Silver Bullion
8 IAMGOLD Corporation
9 Kinross Gold Corporation
10 San Gold Corporat
August 26th, 2010 at 8:02 pm
Don:
sorry is me again, XEG is Oil and Gas, from the Charts November may be to early for Oil and too late for Gas. What do I miss?
August 26th, 2010 at 9:18 pm
Dear Don,
The stock market functions because of the balance between supply and demand for securities.
I am worried about excessive short selling and derivatives trading, since they distort the balance between supply and demand and lead to great market swings, which can erode investor confidence and even lead to a severe recession.
I believe that short selling ought to be limited to , say 10% of the outstanding number of shares of any corporation.
I would appreciate your thoughts on this issue.
Many thanks
Sam
August 27th, 2010 at 6:11 am
Hi Ron/BC,
Thank you very much for your advice.
August 27th, 2010 at 7:04 am
GB, its simple, more in store, cheaper gas, thus you bet on HNU to go down, so u BUY HND. N/G could drop a lot lower, P&F shows $1.50. I am up big time on HND, but I dont like keeping it O/N, but if you dont you loose the Gaps. Also, think WTIC is going back below $71.50, so try HOD but watch minute by minute WTIC, in case it goes in oppasite direction.
August 27th, 2010 at 10:09 am
Jan, not so simple for me, so far the trend is down, yesterday I sold with 2% profit and was sleeping this morning at the open and after reading the paper my cofee in the garden cost me 5% for not buying HND. Nat Gas is like a feather in the wind, can you see the wind?
-Last week on Thursday 19th gas storage estimated 3009 +23 versus reported 3012 +27 was Net +4, so like you said more in store, cheaper gas, Buy HND was good, gas went cheaper and profit up on HND, very logic.
-This week on Thursday 26th gas storage estimated 3056 +44 versus reported 3052 +40 was Net -4, so less in storage, more expensive gas?,Buy HNU was bad, HND was again up yesterday and is up 5% now on Friday. Encana is also up 2.80% figure that, maybe because the market are up after Bernanke Fed talk is stronger than hurricanes.
Is a 70% chance of a cyclone forming in the Atlantic in the next 48 hours, watch it if it forms and moves to the Gulf gas can jump up, buy HNU
Sleeping late I did not try HOU and it did go in the oppasite direction.
Is a wolf market and we have to be agile and move fast. I only have SLW now.