ShareThisPre-opening Comments for Friday August 27th
U.S. index futures are higher this morning. S&P 500 futures are up 7 points in pre-opening trade. Index futures responded to news at 8:30 AM EDT that revised annualized second quarter GDP growth declined less than expected. Consensus for growth was 1.4% versus the initial estimate of 2.4%. Actual was growth at a 1.6% annualized rate.
Traders are waiting for comments by Federal Reserve Chairman Ben Bernanke at 10:00 AM EDT. Bernanke is expected to review where the Federal Reserve stands on U.S. monetary policy.
Takeover news on 3PAR continues. Hewlett Packard raised its offer from $24 to $27. Dell has the right to match Hewlett Packard’s offer and exercised that right this morning. Dell recently increased its offer from $18 to $24.30. 3PAR quickly moved to $28.90 in pre-opening trade.
Tiffany added .5% after reporting higher than consensus second quarter earnings.
Technical Action Yesterday
Technical action by S&P 500 stocks was bearish again yesterday. One S&P 500 stock broke resistance (Red Hat) and seven stocks broke support (Cisco, Dean Foods, General Dynamics, Marathon Oil, Micron, Patterson Dental and Schlumberger). The Up/Down ratio slipped from 0.63 to (154/248=) 0.62
Technical action by TSX Composite stocks was quiet. One TSX stock broke resistance (Cominar) and none broke support. The Up/Down ratio was unchanged at (99/69= 1.44.
Mr. Vialoux on BNN Television
Mr. Vialoux is scheduled to appear on BNN Television tonight at 7:00 PM EDT.
Interesting Chart
Energy stocks (e.g. Marathon, Schlumberger) were notable on the list of stocks breaking support.
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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 $11.08 August 26th 2010
· Open 11.09
· Close 11.08 (down $0.01)
· High 11.09
· Low 11.06
· Bid 11.05 x16
· Ask 11.14 x4
· Volume 56,613
· 52-week High 11.37 06/03
· 52-week Low 9.44 02/05
· Beta 2.30
· Net Asset Value per unit: $11.04 (down $0.01)
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Discussions from the Tech Talk Forum:
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August 27th, 2010 at 1:58 am
Amelia,
Thanks for your response.I have TRP for long hold as well But all inf of mrkt going down in sept/oct tempted me to consider selling & buying again.Now that its broken 37.52, I think I will forget about it for a while.BTW wher do you see next resistance.
Muntazir
August 27th, 2010 at 5:08 am
Hi Muntazir.
I see support at 32.60 and resistance at 37.75 today for TRP.
Yesterday in talking about the markets someone said the computers are in control. I see this as an opportunity as an investor because when evaluating on a fundamental, seasonal and technical basis the program trading, which is very short term, can lead to price disconnections, out of line of fundamental, seasonal and technical influence that may lead to very favourable entry points for long trades and investments. If program trading drives down the price but everything else lines up it might be something to take advantage of.
A stockbroker friend called me in late October of 87 for a great buying opportunity on the first day I heard of program trading and the first day I took an interest in the stock market.
August 27th, 2010 at 5:38 am
Speaking of computer trading
http://www.theatlantic.com/science/archive/2010/08/market-data-firm-spots-the-tracks-of-bizarre-robot-traders/60829/
(I can’t seem to get this into a link maybe you can copy and paste if interested)
August 27th, 2010 at 5:39 am
It did go into a link
August 27th, 2010 at 5:47 am
Hi,
Is it too late to get in gold and agricultural stocks now? Should I wait till October pullback?
Thanks
August 27th, 2010 at 6:07 am
don/ron/anyone
i am interested in XIN(msci eafe) and XSP(s&p500) for divesification with normal canadian equities. both XIN and XSP are canadian dollar hedged etfs. question: do charting and indicators work in these equity/exchange rate interplays?
August 27th, 2010 at 6:53 am
Hi Don,
The Beta 2.3 you are reporting – is that based against the TSX Comp, or the S&P?
Thanks
August 27th, 2010 at 7:02 am
Hi Ron, RIM is at $48.30 – does it look to you like a decisive breakdown below $50? SNDK is down another 5% on no news… I’ll be looking for $32 entry point.
August 27th, 2010 at 7:25 am
The sentiment on RIM has been negative nearly all year – are the stories of its demise similar to PALM greatly exaggerated?
August 27th, 2010 at 7:33 am
Slava: RIM is clearly breaking 50 with today’s entire range so far below 50. It is breaking down with traders throwing in the towel and likely short sellers smelling the blood like sharks and shorting it as well. The close is the most important level but price is in a downtrend with no sign of a trend change back to up. Often a big round number like 50 especially at a double bottom finds support. This is one of my favourite buy set ups on a pull back in an uptrend. And there are clear positive divergences on this price level. But the trend is more powerful than other indicators and support levels are far more likely to breakdown than resistance levels breaking out in a downtrend. Note how RIM couldn’t even clear and hold 1st minor resistance at 51 for two days. Major support is at the March/09 market lows when it tagged 45. The only positive possibility is a high close above 50 which would be a bullish reversal bar with a long tail and on high volume. This would suggest a wash out of the scared bulls which would cause short covering and fresh buying. I still expect a big rally dead ahead but I don’t bet on being right. I’d need the chart to make that decision. NOTE: S&P 500 tagged 1039 again just like the other day. Watch that closely. This is an important price pt to hold to suggest a turn around in the markets! Today’s close just might tell suggest the next significant move.
August 27th, 2010 at 8:10 am
Hello Ron
The RSI on most of the gold & silver stocks is over 70 (overbought)ie g , slw etc. We are in their period of seasonality, so do they continue to move up?
August 27th, 2010 at 8:14 am
Can anyone comment on short term outlook till October for SLV ? I have been holding it since May and it has bounced up and down throughout. Should I sell here or hold for a slightly higher potential ?
Richard
August 27th, 2010 at 8:30 am
Roy: The RSI is a good indicator. I use the RSI 21 rather than the RSI 14 as it isn’t as fast and the signals more significant. But both are well over 70. This doesn’t necessarily stop a rally as the trend is up in all measurements. Higher highs,higher lows,rising steady uptrendline, 50ema consistently above the 200ema. And longer term indicators I use still tagging support and then continuing to rally. But at the same time if you draw a vertical line through price and the RSI you’ll see price does peak at these spikes over RSI 70 level and drop back at least a little with that indicator coming more back into line. What I look at is the chart pattern and price has broken out over a 4 month channel between 18.35 and 22.50 which projects the size of the channel being $4 above the breakout point suggesting a rally to 26-27. What is a concern more than just being overbought is the distance of price from its 50ema. Look at a chart and see what happens when price is a long ways away from its 50ema. It invariably snaps back to it. Now the 50ema is rising but price is still a long ways from home (50ema) and even with new breakout highs is vulnerable. A trailing stop will stop the clock if one is concerned with giving too much back. I’ve traded in and out of SLW to many times to count and it is a volatile market with a high beta and doesn’t respect support and resistance levels closely. It trades much like Gold and Silver and loves to whiplash everyone with false breakouts and breakdowns and then reverse. So it all boils down to your trading style from here. So far so good……
August 27th, 2010 at 9:16 am
Try experimenting with stochastic RSI (stochRSI on the indicators pulldown in Stochcharts) along with 21 RSI. I find this very useful along with the other indicators that Ron/BC mentions above especially the 50 EMA and 200 EMA.
August 27th, 2010 at 9:44 am
Great market turnaround except for “Nat gas”. Don has a stat that shows most of the time before and after holiday weekend the market trends up. Maybe this is one of those up long weekend.
August 27th, 2010 at 10:26 am
Many Gold stocks are bumping up against or close to price resistance levels. ABX, AEM, IMG, K, XGD are all tagging previous highs or downtrendline resistance points or are spinning their wheels at/near or slightly above these previous levels along with many juniors doing the same. Just something to pay attention to. Prices would need to clear these levels and hold to confirm a new leg up from these price points. It’s much like driving and being at or near the top of an icy hill spinning your wheels to get over the top with the possibility of sliding back down. Should find out soon enough………
August 27th, 2010 at 10:43 am
Ron/BC: Good observation on gold stocks. I lightened my gold position this morning and made enough for the gold seasonality, though I’m still hanging on ELD………. something cooking……any thoughts?
August 27th, 2010 at 10:56 am
Pyara: I traded ELD before the breakout from solid support at 16 to 17 resistance. Buying at “strong support” on a chart and selling at 1st resistance in an uptrend is a great way to swing trade with little risk and you don’t have to bet your life on a valid breakout that often fails and catches you at a top and then flushes you. Nice breakout now over yet another resistance pt of 19 and to new highs. Price is now in yesterday’s range and not going anywhere but the day is young and that’s not a lot of info to evaluate. But price is 2.40 above its 50ema and definitely stretched out a long ways from home. And the RSI 21 is over 70 in the very overbought zone. Negative divergences are showing on the RSI 21 on the 60 minute chart not that it guarantees a sell off. I follow the old saying “Bulls make money, Bears make money and Pigs get slaughtered”. I try to avoid being greedy and take the money and run when it’s offered to me. So holding on depends on your trading style. Might just be headed for the moon….or not……..
August 27th, 2010 at 12:33 pm
Hi everyone,
Don, welcome back from vacation!! Looking forward to seeing you on BNN tonight!
Just looking for advice on here about where people are expecting the markets to go from now into October – is the thought that next week the markets will bounce up to the recent highs and then do its usual pullback from September into October? Any thoughts on this would be appreciated!
Thanks everyone!
Eve
August 27th, 2010 at 1:09 pm
Markets closed, remmember Don is on BNN at 7pm, enjoy the weekend reading
Edwin Lefèvre’s book: Reminiscences of a Stock Operator. A book about one of the best traders of all time. Jesse Livermore. I strongly recommend reading it if you haven’t done so yet. You can just hit download Reminiscences for free.
August 27th, 2010 at 1:10 pm
A good day on the markets, Bernanke’s comments made people jump for joy. I question all of the joy. GDP was revised down to 1.6%. Also, the Fed and the U.S. government plan to spend more money helping the economy. With the government in debt up to the gills, should people celebrate this?
August 27th, 2010 at 1:10 pm
just click this link http://www.archive.org/details/ReminiscencesOfAStockOperator
August 27th, 2010 at 1:11 pm
Hi Ron,
Thanks for all of your very detailed and informative posts over the past few weeks. I am relatively new to Technical Analysis and have learned so much from this site! How do you find the stocks that you trade at solid support? Are you watching hundreds of individual stocks, or do you have favourites that you follow? Are there screens to help locate stocks trading at or around support?
August 27th, 2010 at 1:42 pm
Novice Investor
As far as charting goes on XIN and XSP everything works exactly the same. The prices are aty different levels but the movements if not exact are within hairs of each other. Naturally the volumes are lower on the TSX so liquidity suffers. Both of these symbols trade options on the MSX but as is usual that exchange will always try to screw you. So it is best to trade on the NYSE.
And, the hype over exchange rate differential is overblown irrelevance. We hear that parity is coming and coming and coming but it really never gets here yet a nonevent becomes an overwhelming investment factor: media and guru dementia.
August 27th, 2010 at 3:05 pm
Wendy: I’m from the old school and just use basic technical analysis with chart patterns, support and resistance pts, moving averages etc. I do use oscillators etc as well but the basic stuff is the most important. I use Qcharts software for my charts which costs about $150 per month for live charts with some live commodities. They have exception charts that can be sized to show up anything you wish to view and in all time frames from 1 minute to months. There are sites that scan stocks for you and you just punch in your selected settings but I don’t subscribe to them. They are supposed to be very good and do keep your eye on just those that meet your technical requirements rather than chasing after every stock you read about. I think maybe even Stockcharts many subscribe to has this. But in a nutshell without getting complicated if you print off a chart and draw horizontal lines across the “most obvious lows and highs” that show up this will show you the support and resistance pts to watch. Then look to see price rising from the left of the chart upwards and you have an uptrending market to increase your odds of success. Look at a chart of XGD and see in July it dropped to 21 support. This was the Mar and April high you would draw a line across and also draw an uptrendline across the Feb and March lows. Angled lines across lows and highs are also good for a guide but old highs and lows more important. See both lines line up at the same price of $21. But note while these price pts are not exact they rarely are exact. The more support points you see at one price pt the stronger the support. Or if you see price trading for weeks or months between two prices that is a channel. Simply trade the channel from near the low and get out near the high of the channel. And always have a stop loss in place in case support doesn’t hold. Never argue with market direction as it is the only thing that is ever right. ETFs smooth out a group of stocks and help avoid individual surprises and tend to be safer to trade as long as there is good Daily volume to get in and out with limit orders not market orders. Don’t know if this helps but you can paper trade with ideas and then open a practise account to test your new ideas as well without losing any money. But a picture is worth a thousand words so print off some charts and practice drawing in lines to get a feel of support and resistance. After a while you’ll sense things much better. Later you can study the meaning of chart patterns and other stuff. For now just practice with the charts to see these critical price points.
August 27th, 2010 at 4:51 pm
Thanks Ron, I’ll print out XGD and have a close look. Have a great weekend!
August 27th, 2010 at 9:55 pm
Hi, after the BNN program I was left somewhat confused because Don mentioned one of the top picks was CASH until October but what does this mean when we hold a number of gold and agriculture stocks? Does this mean we should sell them now and then buy back in October? Any clarity would be very much appreciated! Great program tonight on BNN Don. One final question is how to find out the holdings for the HAC as this market is tiring to the extreme and this etf would provide a break …
Thanks
August 28th, 2010 at 7:39 am
Hi Rena, I think what Don is saying that of all the available funds one has to invest in equities, a portion should be left in cash. The portion that HAC has in cash is over 80%. If you check the Horizon site I’m sure they have the latest HAC holdings.
August 28th, 2010 at 8:05 am
Hi Ron/BC, Great comments in your post 25 above to Wendy. I would be interested in your opinion about ETFs compared to individual equities. I can see traders buying into support and selling into resistance on individual stocks. It really is a self fulfilling prophecy. The evidence is there just looking at the charts. It works at least until the support or resistance is broken. What about ETFs that represent a basket of stocks. Market makers sit at the bid and ask trying to represent the value of the basket. This while scalping there commission. People trade the ETF. In the case of ETFs, don’t the support and resistance levels become less important? If you break this down to a dog and its tail, in your opinion, who is wagging whose tail?
August 28th, 2010 at 8:49 am
Dave A: The majority of trades today are based on technicals. I don’t have the exact stats but from what I understand this is clearly the case. So whether it’s a stock or ETF doesn’t matter much. An ETF does smooth out prices so you don’t’ get the big bang as a stock “IF” it’s the right stock in a group. And that is always a big if. Only the double and triple ETFs are suspect in their chart patterns due to the way they are calculated. So the ETF is safer to trade as one company’s bad earnings report or company disaster or government intervention won’t trash the ETF to any degree like the stock. It will influence the ETF but nothing like the negative stock itself. Over the years its like playing Russian Roulette and sooner or later you will be caught in one of these nightmares with a single stock. Just like the futures market. Think of Nortel as one example but the list is a long one of even high flyers. So risk exposure is always the important factor. It amazes me how people can hold positions continually and ignore their risk exposure to so many financial and political factors with such complacency. To me it’s like skipping through a mine field singing Tip Toe Through the Tulips. And when I wake up in the morning I’m not concerned with the latest shocking news and market plunging or soaring and blowing my socks off. Cash is king….I still believe it and more so every day. I trade single stocks often as well but keep it short and sweet and trade the safest trades. My goal is getting back into cash asap and slamming the door again…..with my money. It doesn’t seem to go bad sitting there waiting.
August 28th, 2010 at 9:27 am
Hi Ron, That is very funny! I’m still laughing about your metaphor. It’s great to have a laugh once in awhile. This to offset the crying as a result of socking hard earned trading profits into Manulife this year. Is the BC on the island? I say this as I live in Victoria trying to generate interest in a local CSTA chapter.
August 28th, 2010 at 10:07 am
DaveA: Yes I’m on the Island. In 2000 I met with a bunch of traders and as I said the other day we might as well have all spoken foreign languages as each had their own firm ideas and methods. The big problem is people want to believe what they wish to believe and actually often get angry when you tell them prices will fall. I recall reading a quote by a guy that said if you told a Gold Bug that Gold and Silver were going to fall it’s like telling them their kids are ugly. In 2000 the group I met with basically asked me to leave as I was very bearish. No one wants to hear bad things as they are raised to be optimistic and enjoy dreaming of success with up being good and down being bad. So I have to question a group of traders meeting and actually accomplishing anything. Then the even bigger problem as in most things in life is “EGO”. Very dominate in finance. More b.s. in finance than politics. Combine those factors and you have gridlock between determined dreamers and arrogance. Perhaps I’m a pessimist but I’ve found that is the reality of it. I am a semi retired self employed contractor. No letters behind my name and not a broker or banker or other hot shot. Just someone who has traded many markets all my life including surviving recessions in business. No one of any importance……….and people prefer to deal with hot shots as it just feels better,lol………
August 28th, 2010 at 1:19 pm
thanks for the response Ron however, most of my cash is in gold stocks and agriculture which I find difficult to sell right now because of the situation vis a vis the agriculture stocks such as AGU,COW, will likely go higher as will gold. Is Don suggesting to sell all the gold stocks then buy back late October perhaps?
August 28th, 2010 at 2:00 pm
Rena: You’d have to ask him directly but he is more of a trend trader and seems to prefer to catch a trend and stay put. Listening to him yesterday on BNN he did mention the Gold stocks being overbought and perhaps to wait to add more but that’s about as bearish as I think he would get. I agree they are very overbought. So again it all boils down to your trading style. It doesn’t bother me to get off and on again if necessary as I don’t like to see profits disappear when they are there. So far both trends of Gold and Ags are up with the seasonals positive so I guess if one is a trend trader they just throw them in a drawer until the end of Sept for the Golds and end of Dec for the Ags and cash in when the seasonal trend is over “or” the technicals tell you sooner or both. That’s my best guess…….Perhaps ask him directly Monday AM 1st thing.
August 28th, 2010 at 3:20 pm
Hi Reza. Buy gold and agriculture stocks on weakness. Watch for a technical entry point based on momentum indicators.
August 28th, 2010 at 3:21 pm
Hi Novice Investor. Yes, charting techniques and indicators work well for U.S. based currency hedged ETFs.
August 28th, 2010 at 3:28 pm
Hi Rena. If you are a seasonal investor, preferred strategy for gold and agriculture stocks is to buy in late July and take profits in December. Weakness is to be bought based on technical indicators. Traders who are not using seasonal strategy (e.g. day traders, short term swing traders)will use other parameters to determine entry and exit points.
August 29th, 2010 at 11:35 am
Hi Don
You mention buying Agri and gold stocks on weakness.
What price would you consider weakness for Example for Agrium which started its run much earlier than usual as I would like to enter a trade? Thanks
August 29th, 2010 at 1:22 pm
Just an observation. RIM recently broke below a double bottom at 50 on a Friday close clearly breaking any support at a big round number that often serves as support. And a Friday close is more significant that intra week closes. But it is also showing strong positive divergences on most oscillators displaying technical strength in a very oversold market. The multi year uptrendline from 2003 and June 2006 is presently at 47.50. The Oct/08 and March/09 major lows were at 45. This price level is significant as it was the high in the bull market on Jan/2000 and price broke up over this level in the new bull market of 2006 in June of that year. That breakout price was successfully tested as support in the Mar/09 sell off market lows and held up and price is approaching this area of support once again with a Friday close of 48.35. And as mentioned the 7 year uptrendline is at 47.50. I’m not suggesting to buy RIM as it is in a major downtrend but I am pointing out the technical possibilities of price approaching a major support level but also within a severe downtrend. Just something to keep an eye on. Seasonals do not get positive for Tech until early Oct. Fundamentals or at least the news media continues to favour APPL over RIM which has been bearish for RIM. A spike down towards 45-47 would definitely get me interested even if it is a counter trend trade. Warning:Catching a falling knife can be hazardous to your trading account. I suspect it won’t get there but just tease technical traders waiting for this and turn around an run back up again on a positive news story fresh out of the media’s “good news story” bag. Should soon see either way…….definitely not a recommendation. There are easier fish to fry…….
August 29th, 2010 at 2:29 pm
Hi Don,
When do the gains have to be taken on US stocks to take advantage of George Bush’s tax program? Sellers will be selling in 2010 before extra tax on capital gains in succeeding years after 2010. When does this have to done by? Does this have to be done by October or at the end of December? You do expect that this will be an excellent buying opportunity for investors. There will be upward movement after all this tax selling is done. You have to take advantage of George Bush’s tax concession on capital gains. Thanks.
August 30th, 2010 at 5:55 am
Hi Don-enjoy you on BNN. I have Sept put options on RIM at 62 and 68.Should I cover or let them put the stock to me and hope the stock works it’s way back up by Jan 17th. thanks Gary