ShareThisPre-opening Comments for Tuesday August 31st
U.S. equity index futures are down again this morning. S&P 500 futures are off another 4 points in pre-opening trade. Traders are concerned about economic news to be released later this week that confirms a slow down in growth. In addition, traders are concerned about possible implications of Hurricane Earl hitting the North Carolina coast on Friday.
Canada’s economic growth also is showing signs of slowing. Annualized second quarter GDP grew at only a 2.0% rate. Consensus was growth at a 2.5% rate. In addition, growth in the first quarter was revised lower from 6.1% to 5.8%. The Canadian Dollar weakened on the news. Lower than expected second quarter growth has lowered the possibility that the Bank of Canada will increase its overnight lending rate by 0.25% next week.
Home prices in the top 20 U.S. cities continue to show year-over-year gains. The gain at the end of June was 4.4%. Consensus was a gain of 3.1%.
Potash Corp. slipped 0.5% after Gleacher downgraded its rating from Buy to Neutral.
Monsanto fell 3% after guiding earnings lower.
Dollar General added 0.5% after reporting higher than consensus quarterly earnings.
Gap Stores added 0.5% after Wells Fargo upgraded the stock from Market Perform to Outperform.
Raymond James upgraded Methanex from Outperform to Strong Buy.
Saks gained 28% in Europe this morning on rumors that a private company is planning a takeover.
Research in Motion is down 1.5% after Bernstein reduced its target from $55 to $40.
Technical Action Yesterday
Technical action by S&P 500 stocks was quiet yesterday despite the fall in U.S. equity indices. No S&P 500 stocks broke resistance and two stocks broke support (McKesson and Safeway). The Up/Down ratio was unchanged at (153/250=) 0.61
Technical action by TSX Composite stocks was quietly bullish. Four TSX Composite stocks broke resistance (Enerplus Resources, Inmet, Laurentian Bank and Stantec) and no stocks broke support. The Up/Down ratio improved from 1.46 to (104/69=) 1.51.
Equity Markets in the Month of September
Thackray’s 2010 Investor’s Guide notes that the month of September is the weakest performing month of the year. Data since 1979 shows that average losses per year were 1.0% for the S&P 500 Index, 1.3% for the Dow Jones Industrial Average, 0.9% for the NASDAQ Composite Index, 1.0% for the Russell 1000 and 0.8% for the Russell 2000.
Tech Talk has completed a series of 10 year studies that confirms continuation of weakness in most equity markets around the world. Following is a summary:
Market Average Percent Change
Per Year in past 10 Septembers
S&P 500 -2.43
TSX Composite -3.00
Dow Jones Industrial Average -2.40
Russell 2000 -1.74
NASDAQ Composite -5.05
Dow Jones Transportation Average -2.82
Nikkei Average -2.74
London FT -2.63
Frankfurt DAX -4.04
Paris CAC -3.69
Australia All Ordinaries -0.23
Brazil Bovespa +1.45
Shanghai Composite +0.65
All S&P sectors moved lower except energy
Market Average Percent Change
Per Year in past 10 Septembers
Energy +0.42
Consumer Staples -0.12
Health Care -0.34
Telecom -0.81
Financials -0.95
Utilities -1.52
Industrials -2.14
Consumer Discretionary -2.56
Materials -3.57
Information Technology -6.83
Weakest subsector was the Semi-conductor Index (SOX), down an average 12.03%.
Gold and gold equity indices were notable exception. Gold gained an average of 4.52% per period. The Philadelphia Gold and Silver Index added 3.22%. The Amex Gold Bug Index improved 5.06%. Silver also gained 2.17%.
Other commodities did fair as well. Crude oil slipped 2.93%. Copper eased 0.85%. Platinum fell 4.36%. Aluminum lost 1.00%. Lumber plunged 11.49%.
FP Trading Desk Headlines
FP Trading Desk headline reads, “While U.S. companies see strong earnings growth, Canadian companies falter”. Following is a link to the report:
FP Trading Desk headline reads, “Lower natural gas prices set to take their toll on energy industry”. Following is a link to the report:
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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 $11.09 August 30th 2010
· Open 11.06
· Close 11.09 (Up $0.02)
· High 11.11
· Low 11.06
· Bid 11.06 x16
· Ask 11.14 x4
· Volume 56,237
· 52-week High 11.37 06/03
· 52-week Low 9.44 02/05
· Beta 2.31
· Net Asset Value per unit: $11.05
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Discussions from the Tech Talk Forum:
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August 31st, 2010 at 7:09 am
Ron, so RIM is now down to $46.70 Cdn. When is next support? Also, what are your thoughts on gold stocks? Are we in for a pullback soon in your opinion? Thank you
August 31st, 2010 at 8:52 am
Hi Ron, Thank you for your comments on $NATGAS yesterday. The discussion and input from everyone was great. It will be interesting to see what happens in the next few days. Whether or not there will be a trend change in prices. Dave
August 31st, 2010 at 9:01 am
Felt a bit uneasy re HNU, but picked up some at $ 3.92, lots of volume. Also On balance volume positive for first time in ages and hurricane season and ones probably about to do damage, near the start of NG season too.
August 31st, 2010 at 9:11 am
Can anyone comment on why DGC is pausing recently while ABX, AEM, XGD continue to surge ahead? – I can’t seem to find any reason. – Thanks all.
August 31st, 2010 at 9:54 am
how can i access dons talk about $natgas? anyone ?
August 31st, 2010 at 12:13 pm
Slava:Tech analysis and thoughts on gold and silver stocks
http://www.gold-eagle.com/editorials_08/maund082910.html
August 31st, 2010 at 12:24 pm
Ron. What do you think about the Hindenburg Omen buzz?
August 31st, 2010 at 4:32 pm
Hi John. A comment on Canadian natural gas is offered in tomorrow’s Tech Talk.
August 31st, 2010 at 5:47 pm
Slava: Sorry, I actually had to work today. Got roped into a job for someone that has done me a lot of favours over the years so just can’t say no. Could take a week or more to complete. But looking at RIM you can see end of day price tagged the 45 area. The Dec/08 and March/09 low did hit 44something intraday but the low close during that entire period was 45.50 and today’s close was 45.70. Also see positive divergences on the oscillators on the Daily chart as well. RIM technically is at a major long term support area but the trend is clearly down. Technically one could buy in the 45 range if you can deal with buying in a falling market but with a closing stop at a suitable level below that long term support point.
As far as Gold stocks go I know Don would say “tis the season for Gold stocks” and the trend is your friend as well which has been up. But what I see is ABX, AEM, G, CG etc all bumping up against their Dec/09 price resistance high. And IMG bumping up against the May/10 high. And GDXJ bumping up against the June/10 highs. And the golden haired boy “SLW” selling off end of day with a huge reversal bar. So needless to say these resistance levels need to be cleared to suggest another breakout over major resistance and further gains. Many are very overbought as well. Me:I’m spooked of course and wouldn’t touch a Gold stock right now with a ten foot pole. But that’s just me. It doesn’t take much.
August 31st, 2010 at 5:58 pm
Denis: Someone always comes up with something like this. There is a lot of data that makes up this Hindenburg death threat and it rings of hype like so much financial stuff today. Fear sells. I didn’t spend much time on it as I saw it was very involved. I am not that bearish because the bearish sentiment is too extreme. What that means is a large percentage of traders have already sold out and refuse to commit more funds as they are fearful. And short sellers have shorted heavily including put options. Just look at the open interest in put and call options on most anything and you’ll probably see far more open interest in the puts from what I’ve seen. This tends to reduce the selling pressure as there just are not a lot of long positions to scare out of the market. But the charts will tell the story better. Just look at the TSX clear the early August highs today and notice Friday price broke up over the June to July sell off downtrendline. It’s not acting like a market that wants to sell off. But whatever, maybe there is a financial hurricane shocker out there on the way……………
September 1st, 2010 at 12:24 am
Ron, thank you very much for your reply. I’ve been in Vegas over the last four days looking at some real estate opportunities with my family. It’s so cheap in Vegas compared to Vancouver!
August 2010 was a really bad month for me from the investing/trading point of view. As a matter of fact, it was one of the worst for me with my RIM and Manulife positions. I also sold some of my winning stocks wayyyy too soon and, of course, who can forget my disasterous OSK short early in the month… Basically, I did everything wrong – sold agri and most gold stocks right before the big run up and picked up some technology since it looked cheap. I hope September is a better month for me. I need to start learning from my mistakes since I tend to make similar costly mistakes over and over. To top it all off, I sold most of my shares of bel.v at $0.17 last week as it proceeded to $0.32 this week… Missed out on around $5,000. Oh well, it’s just a game….