ShareThisPre-opening Comments for Wednesday September 1st
U.S. equity index futures are higher this morning. S&P 500 futures are up 13 points in pre-opening trade. Investors are responding to a report on China’s manufacturing index showing higher than expected growth. Auto production in China increased 55% during the past 12 months.
Index futures briefly slipped on news that U.S. private employment in August released in the ADP report was worse than expected. Consensus was an increase in private employment of 14,000. Actual was a loss of 10,000. The ADP report is a leading indicator of the August employment report to be released on Friday.
Gains today by equity markets today follow a pattern. Equity markets historically record their strongest day of the month on the first trading day of the month.
The U.S. Dollar weakened and commodity prices moved higher following encouraging economic news from China. Copper was notably stronger, up $0.07 per lb.
![clip_image001[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2010/09/clip_image0011.gif "clip_image001[1]")
Coal prices also benefit from greater demand from China and a lower U.S. Dollar. HSBC upgraded the sector this morning. Massey Energy and Arch Coal were upgraded to Outperform. Massey Energy gained 3% in pre-opening trade.
Apple added 3% in anticipation of announcements today of new consumer electronic products. Possibilities include an upgrade iPod and an introduction of iTelevision.
Burger King Holding jumped 19% on a media report that the company is in takeover discussions by private investors.
Stifel Nicolaus downgraded Potash Corp from Buy to Hold.
Bombardier reported quarterly earnings in line with consensus.
Technical Action Yesterday
Technical action by S&P 500 stocks was quiet yesterday. No S&P 500 stocks broke resistance and three stocks broke support (Broadcom, Quest Diagnostics and TJX Companies). The Up/Down ratio was unchanged at (153/251=) 0.61.
Technical action by TSX Composite stocks was bullish yesterday. Four TSX stocks broke resistance (CI Financial, IAMGold, MDS and Fairfax Financial) and none broke support. The Up/Down ratio rose from 1.51 to (106/68=) 1.56
Interesting Charts
Gold and gold stocks remain a highlight. iShares on the TSX Gold Index broke to an all time high yesterday.
Notably stronger are mid-cap and small cap stocks in the sector.
Encouraging technical action was recorded in Canadian natural gas yesterday. Short term momentum indicators have bottomed and are starting to recover.
Weekly Technical Review of Sector SPDRs
(Assuming that July 1st recorded a significant low for U.S. equity markets)
All sectors except Financial Services are trading above their July 1st low. Financial Services broke support late last week.
MACD and RSI for all sectors continue to trend lower. Most are oversold, but have yet to show signs of bottoming.
Stochastics for most sectors are showing early signs of bottoming from an oversold level (i.e. moving above the 20% level) including Consumer Discretionary, Industrials, Energy, Utilities, Financial Services and Materials.
Best performing sectors since July 1st remain Consumer Staples, Materials, Industrials, Energy and Utilities. Neutral performing sectors are Technology and Consumer Discretionary. Underperforming sectors are Financial Services and Health Care.
Best performing sectors during the past week were Utilities, Financial Services and Materials. Neutral performing sectors were Consumer Discretionary, Health Care and Consumer Staples. Underperforming sectors were Technology, Industrials and Energy.
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Adrienne Toghraie’s Trader’s Coach Column
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Trading Buddy
By Adrienne Toghraie, Trader’s Coach
Over the years I have heard from traders countless times that they would like to trade with someone. While they might have an idea of why they need or want a trading buddy, they might not be aware, or want to be aware of other reasons as well such as:
· They are insecure about their own theory and hope to find someone who has a better strategy for entering or exiting a trade.
· They want someone to teach them.
· They want to teach others to either justify what they are doing or learn by teaching.
· They have been used to working as a team in other work environments and they enjoy that interaction.
· They need verification from someone else that their strategy is viable.
· They just do not want to be lonely.
· They want others to take the responsibility of the trade.
Having a trading buddy can be the best or the worst decision that you make for your trading. On the negative side:
· They might not have an agenda that is matched with yours.
· They could be very distracting and confuse you with different views.
· They add their own psychological distractions to the mix of your struggles.
On the positive side, a trading buddy could be exactly what you need to get the best out of your trading and yourself.
Where to find a Trading Buddy
When you isolate yourself behind your computer, you sometimes do not realize that there are people who are just like you who are looking for you as well. Here are some ideas for finding the right match:
· Trading sites
· Webinar rooms
· Local trader clubs
· Seminars
· Trading conferences
· School where you received your training or from your trading mentor
Screening a potential Trading Buddy
Ask for exactly what you think you are looking for:
· Strategy
· Skill level
· Education
· Location
· Temperament
· Time you want to make contact
And, of course let them know about yourself.
Where to meet
While it could be ideal to have a person work in your environment and under the parameters that you choose, there are some other choices that can be even better for both such as:
· Working off of a separate computer at your home on SKYPE with a camera.
· Talking on the phone at specified times during the day.
· Meeting the person on a daily or weekly basis.
Conclusion
Working with someone as a trading buddy can be just what you need to take your trading to the next level. Even if it is just for a short period of time, it will give you enough experience in working with someone else to decide if you want different parameters, a different type of person, or you may find that working alone is ultimately the way you want to be with your trades.
Adrienne’s Calendar of Events
www.TradingOnTarget.com
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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 |
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11/17- |
Live Expo |
The Traders Expo Las Vegas November 17 – 20 Adrienne presents Recognizing 15 Sabotage Traps Workshop Saturday, November 20 – 8am-9am www.TradersExpo.com |
Adrienne |
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Go to www.TradingOnTarget.com or email: Adrienne@TradingOnTarget.com for more information
ETF News
Gold ETFs mushroom in India
Gold exchange-traded funds (ETF) may be new for India, but are gaining in popularity as investors become aware of the benefits of investing in gold in a non-material form as opposed to holding it as jewellery. ETFs are instruments that trade like shares and are backed by physical holdings of the commodity. India is the world’s top consumer of gold, accounting for 20% of global demand. Indians traditionally invest in gold jewellery.Some key
facts and figures on India’s gold ETFs:
* India has eight gold ETFs listed with a total collection of more than 11 tonne, nearly double compared to last year.
* Mumbai-based Benchmark Mutual Fund was the first to start a gold ETF in 2007 and has the largest collection of more than five tonnes.
* The ETFs are listed on the National Stock Exchange and Bombay Stock Exchange and most of them have a share size of 1 gram.
* HDFC Mutual Fund is the newest to offer a gold ETF that started trading last week. ICICI Prudential, which has already collected funds, will list its ETF soon.
* Gold ETFs are a "must have", according to mutual funds, who typically advise clients to allocate 10% of their portfolios to gold.
* More financial firms are expected to launch gold ETFs in their bid to offer a full basket of investment products to clients.
* India’s gold ETF collection is small compared to its approximately 700 tonnes of annual gold consumption, but is seen growing by at least 50% year-on-year, industry members say.
* Indians’ religious sentiment for gold is visible in ETF purchases as well, as volumes tend to rise on days that are considered auspicious for buying the metal, officials managing the ETFs say.
* Silver ETFs may not be too far away as Benchmark intends to launch it, though it has no date for it yet.
Schwab To Buy ETF-Heavy Firm Windward For $150M In Stock, Cash
August 30, 2010– Charles Schwab Corp. (SCHW) said it will pay $150 million in cash and stock to buy investment advisory firm Windward Investment Management Inc., looking to capitalize on the rapidly growing realm of exchange-traded funds.
Van Eck Offers New Small Cap India ETF
Investors will now have another ETF available to capture India’s small cap equity market with the launch of a new ETF by Van Eck. Last month, EG Shares introduced the first small cap ETF for India.
The new ETF from Van Eck, known as Market Vectors India Small-Cap Index ETF (SCIF), will track the Market Vectors India Small-Cap Index. The index is made up of 122 stocks averaging $456 million in market capitalization through July 2010. The minimum market capital requirement is $150 million.
According to the press release, the top three industries captured in the index are Industrials (27%), Financials (20%) and Materials (14%).
Jan van Eck, Principal at Van Eck Global, states, “We are very excited to add SCIF to our growing lineup of emerging market small-cap ETFs. It continues to be our strong belief that small-cap stocks are an excellent way to gain direct exposure to a country’s domestic economy. India, in particular, has exhibited demographic and economic factors that support strong continued domestic growth for years to come.”
August 30, 2010 by ETF.com
Notes from Deborah Fuhr’ July report on ETFs
Deborah Fuhr from BlackRock offers an excellent monthly report that reviews development in the industry. Following are selected highlights:
Exchange Traded Products at the end of July totaled 3,131 products with 6, 287 listings offered by 450 providers on 45 exchanges with a value of $1,223 billion
U.S. ETFs totaled 866 products valued at $741.3 billion. Assets year to date have increased 5.1%. The top 100 products represented 83.5% of trading in July. Year to date number of ETFs increased 12.2% with 117 new ETFs and 23 delisted ETFs. Year to date trading volume increased 34.2% to $61.5 billion.
In the United States over the last five years to year end 2009, the S&P 500 has outperformed 60.8% of actively managed large-cap U.S. equity funds. The S&P midcap 400 Index has outperformed 77.2% of mid-cap funds and the S&P small cap 600 Index has outperformed 66.6% of small cap funds, according to S&P.
Canadian ETFs totaled 151 products with 176 listings valued at $32.5 billion. Year-to-date assets increased 13.9%. Year to date number of ETF has increased 37.3%. Forty new ETFs have been launched. Year to date average daily transactions decreased 19.5% to $769.2 million.
In Canada, for the first quarter of 2010, only 40% of active mutual funds in the Canadian equity category were able to outperform the S&P /TSX Composite Index, according to S&P.
FP Trading Desk Headlines
FP Trading Desk headline reads, “Investor confidence slumps in August”. Following is a link to the report:
http://business.financialpost.com/2010/08/31/investor-confidence-slumps-in-august/
FP Trading Desk headline reads, “Uncertain fate of Bush tax cuts prompts NBF to cut equity exposure”. Following is a link to the report:
Keith Richards’ Blog
Keith is “Going Loonie for the Loonie”. Following is a link to the report:
http://www.smartbounce.ca/Smartbounce/Blog/Blog.html
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 September 1st 2010
· Open 11.12
· Close 11.09 (Unchanged)
· High 11.12
· Low 11.08
· Bid 11.09 x20
· Ask 11.14 x4
· Volume 59,467
· 52-week High 11.37 06/03
· 52-week Low 9.44 02/05
· Beta 2.30
· Net Asset Value per unit: $11.06 (Up $0.01 to an all time high)
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Discussions from the Tech Talk Forum:
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September 1st, 2010 at 6:15 am
Hi Don
You mention Canadian Nat. Gas technically turning positive. What would be the best way to take advantage of this- thru GAS-T or gassy equities like ECA-T ?
Thanks
Jeff
September 1st, 2010 at 6:52 am
Jan.M: Thank you very much for your tip yesterday. Happy hunting!
September 1st, 2010 at 7:24 am
Question for Don or the other posters: I realize currency fluctuations account for the differences in AGU and AGU.to, but I’m wondering which is the most relevant to watch for a potential breakout; AGU because it’s more heavily traded by roughly 2:1, or AGU.to because Agrium is a Canadian company and perhaps the Canadian valuation is more relevant. Thoughts?
September 1st, 2010 at 7:27 am
Anyone whoes interested, HNU recently invested a chunk of change in RIM , which is at a P/F bottom of very near it. So those wise men at HORIZON see RIM recovering very shortly. Also HNU is only 25% in NG contracts, the rest is long a variety of gold base metal and financials.
September 1st, 2010 at 7:30 am
Slava/Denis: I was not around yesterday but did answer your questions later in the day. Have a lot of work to do next little while. Nice rally today.(so far) SPX just broke above 1064 minor resistance and does need to hold above that leve. Next big test for it is 1100 which is a 61.8% Fib retrace of the Aug sell off and a significant and familiar price point. Major resistance at 1115-1131. The TSX broke above the downtrendline of the April to July sell off last Friday and yesterday broke above 11880 which was the August highs price resistance. Next resistance is the June highs at 12080. Keep in mind while Sept is historically a bad month but after a recession has seen a strong month as in 2004 which was also the 2nd year of a new bull market after a nasty recession with a lot of fear in the air. Apparently even talk shows that don’t talk about the stock market are all talking about the Hindenburg effect with a lot of fear. That type of pessimism typically has a very bullish effect on stocks overall.
September 1st, 2010 at 7:30 am
Hello Don
Gold and silver are off today, perhaps one last minor correction before the september rally. Where do you see support for gold and silver? Thanks.
September 1st, 2010 at 7:36 am
Hello Jan
Isnt there a time value for HNU and you have to be quite nimble trading it? Isnt GAS a better play?
September 1st, 2010 at 7:42 am
Ron – thanks for your gold comments yesterday – looks like the world listened and is taking profits on gold today
September 1st, 2010 at 8:38 am
Hi Jan. Are you sure about HNU? This is what I got from their website: “The HBP Natural Gas Bull+ ETF and the HBP Natural Gas Bear+ ETF take positions in financial instruments and/or equity securities to seek daily investment results, before fees and expenses that correspond to twice the daily performance or inverse daily performance of the NYMEX® Natural Gas futures contract for the next delivery month”. It would seem that it goes against their investment parameters to invest in instruments not related to natural gas.
September 1st, 2010 at 8:38 am
Ron/BC
The actual low on the S&P 500 occurred in the latter part of 2002 with a higher low in 2003. 2002 would have been in the same year of the Presidential cycle as this year is 2010. Not sure if this muddies the waters or not but 2004 would have been the 3rd year after the lows were recorded. But as you have been suggesting all along caution is the flavour of the day.
September 1st, 2010 at 8:45 am
hi Don and all the other posters,
I want to thank you all. I am a novice in all of this and I read this sight every day.
I would like to buy some XGD . Jan Mohammed, you seem to be comfortable giving specific numbers. Do you have an idea of how low it can go before it rallies?
Thanks for all this teaching. SW
September 1st, 2010 at 9:13 am
Don, golds in general are off today, some significantly, like 4% or more. You said in your BNN appearance last week that you would like to buy more gold. Is this the weakness you need to see? I, too, would like to buy more.
September 1st, 2010 at 9:34 am
GB: Happy Birthday !( wish you have birthday every day so I coulc more trade). I would like to thank you very much for you support . Now I play both HNU and HND. It works great. I had HND since early and sold last Sat at 9.00. Trend has been change. What I mean is with those kind of ETFs , I can hold weeks meantime playing the reversal as far as follow the trend…. Happy hunting!
September 1st, 2010 at 9:39 am
Michael: I ditto your comments about HNU. It is supposed to invest only in natural gas and related gas future financial instruments.
September 1st, 2010 at 9:40 am
Hi Michael. Go to TD/Waterhouse site, click on Mkts & Resh and then click on HNU or HND, scroll down and they tel;l you exactly whats in either. Also for some QUEER reason, HNU the BULL etf is SHORT on N/G. Check it out.
September 1st, 2010 at 9:52 am
Hi ,I swing both ways with HNU and HND, sometimes hold overnight and like Lin, I get a good percentage of my trades correct, as far as GOLD goes, I play the Kitco minute by minute live gold chart in conjunction with XGD, and i do better than N/G. Just now I am out and figure XGD may go to $23, but I watch live gold for an oppotunity. Don mentioned to wait for a pull back but also figures gold could go to $1350 before years end.Also read Jon Nadler on Kitco, he has excellent points of view. Think I will go sailing now.
September 1st, 2010 at 10:08 am
For Andrew’s question re AGU and AGU.TO:
On days the Cdn dollar is DOWN, you will find that AGU.TO goes up more than it is going up in the U.S. version of it (if however, in the U.S., AGU is going down, it will go down LESS in Canada when the Cdn dollar is DOWN that day). The opposite holds true if the CDN dollar is UP on a day (ie. the stock will go up LESS in Canada than it will in the U.S. if it’s an up day for the stock). This of course is due to the change in the Cdn dollar.
At the end of the day, both the U.S. and Cdn listed versions of the stock will be worth the same value (using the exchange rate of the day).
BUT, if say the Cdn dollar was UP that day and so you bought AGU in the States and made say $1.20 on 1000 shares, then you’d have made $1200 U.S. on the day. In Canada however, if the stock that day had gone up by $1.20 in the U.S. and the Cdn dollar was UP, then AGU.TO would have gone up LESS that day – so say, it went up only $1.00 in Canada which means your profit on the day would be $1000 ($1.00 x 1000 shares). Now if you traded the stock that day in the U.S. and made the $1200, you can bring that amount into your Canadian account without any exchange rate loss as long as you do it on that same day (your broker will do this exchange for you on a 1:1 basis but you have to call them and ask them to transfer this money into your Canadian account at no exchange rate loss/ gain on the day. Now if you think the Cdn dollar will go DOWN from when you did the AGU trade in the U.S. that day, then I would suggest waiting for that time before you transfer the amount made into your Canadian account because you’ll also then make more than the $1200 U.S. that day when you transfer it to your Cdn account AFTER the Cdn dollar has declined from the day you did that trade of AGU. If you think however, the Cdn dollar will appreciate from the day you made the $1200 in AGU, then I would just call your broker the day of the trade and have them transfer the $1200 U.S. straight away into your Cdn account.
This process works with all interlisted stocks – not just with AGU.
Hope this helps!
Alexa
September 1st, 2010 at 10:09 am
Lin: What is the upside for HNU do you think. Bought some HNU and HGD. Any opinion. Thanks.
September 1st, 2010 at 10:14 am
For Andrew again re AGU.TO and AGU:
The exchange rate loss comment I’ve made in my previous post is only true for registered accounts in that your broker will be able to provide you with the proceeds earned with no exchange rate loss if done on the SAME day when buying/ selling U.S. stocks on the U.S. exchanges. This isn’t the case when in a non-registered account. But if you’ve made say $1200 on a trade in your U.S. trading account (non-registered), and you think the Cdn dollar will go higher, then I’d ransfer the proceeds on the same day to the Cdn account in order to not lose out on a forthcoming higher Cdn dollar (if you think the Cdn dollar will be going higher from the day you made the trade in your U.S. account).
Hope this clarifies further!
Alexa
September 1st, 2010 at 10:15 am
Hi Ron, do you think Manulife is out of the woods for now? I’m waiting to average down at some point for a long term hold – I bought some around $18 and some around $14.
I so regret not having bought hgd yesterday. I’ve been busy here in Vegas and missed some purchasing opportunities yesterday morning.
September 1st, 2010 at 10:25 am
Don; A while back you posted some stats on the market trend before and after holiday weekend. Is the Labour Day weekend a positive one for stocks. Thanks.
September 1st, 2010 at 10:27 am
For Alexa:
I don’t think Andrew’s question relates to the value of the stock in USD or CAD but he is asking about which chart he should look at.
For Andrew:
The general rule is to go with the market where the stock is more actively traded. In this case, it would be the NYSE/USD chart.
September 1st, 2010 at 10:57 am
Thanks to Alexa for the detailed reply, although AW was right. Don mentionned Agrium on BNN’s Market Call Tonight a few days ago, stating his belief in a breakout and subsequent push higher during this year’s Ag season. A look at 1 year daily or weekly charts of AGU and AGU.to suggest that if a breakout occurs it may appear to do so on different days on each chart, just given the proximity to earlier peaks & implied resistance levels. That was the motivation for my question.
September 1st, 2010 at 11:02 am
Jan Mohammed:
I checked TDWaterhouse website about HNU. You’re right.HNU is short on N/G 28.2%.It does NOT make any sense as HNU is a BULL product. May be Ron/BC have some thoughts on this item.
September 1st, 2010 at 11:25 am
sw2009 wanted to buy some XGD.
Remember this is the miner index and not physical gold or futures contracts. That said it has been outperforming physical gold of late. If you look at a chart of the 200 day Exponential Moving Average you’ll see it has bounced off this line twice since April 2010. Its top three holdings are Barrick, Goldcorp and Newmont miners (42% of the fund).
Support is at 19.13 and there are lots of bullish technical events in the past month that signal short term momentum. I would be wary of if it dips below $23 short term but for now it seems there is some strength behind it. However slow stochastics have rolled over recently and money flow indicators show It could be overbought so I would be careful.
September 1st, 2010 at 11:38 am
Hi, Kay: I main focus is on intermediate-term trade and price. RE : Gold is pulling back for next few days, HGD is ok to long for short term. Be ware that Gold is marching to the north.
NG season begins. I have 1/3 position long hnu, will add more when it prove I am right. Meantime trade HND for generating income. There are many different thoughts in the market. I’v read Don.V’s works carefully and try to understand his approach since this March. Good luck and happy trading!
September 1st, 2010 at 11:42 am
Kay: Watch tommorrow. 10:30 (EST) about NG report.
September 1st, 2010 at 11:59 am
Jan.M: Then HNU would cover the short when NG goes up.
September 1st, 2010 at 12:00 pm
The holdings info on TD website can not be accurate. HNU must hold derivatives to be able to continue to gain 200% vs the NG index
September 1st, 2010 at 12:05 pm
Thanks to both Jan M and Amelia for answering my question. Hopefully I will take the right decision.
September 1st, 2010 at 12:07 pm
Andrew,
In this case, you may want to consider trading AGU in the US. It is more active (and liquid) and the chart pattern is more reliable. Seems like the US$70 area is posing some difficulty in recent weeks…
September 1st, 2010 at 1:10 pm
Lin: Thanks for your response. Do you normally trade HNU and HND at the same with a larger weighing in one. If so, is it the number of shares or dollar value. It looks like HNU may make a reverse split in my opinion
September 1st, 2010 at 3:46 pm
Don,
In the education section of this website it says that the seasonality of Natural Gas for:
Alberta Natural Gas is from end of August to end of September and end of July to end of October.
Would you consider Claymore’s GAS.to to be right now a seasonal play for an Alberta nat. gas?
September 1st, 2010 at 3:48 pm
Michael / Jan, Regarding HNU. Wow! It looks like Jan is correct. I can’t believe that with their stated objective they would be off investing in tech stocks and gold stocks, but that appears to be what they are doing. Thank you for pointing that out Jan.
Dave
September 1st, 2010 at 3:49 pm
***Correction of the previous post****
Don,
In the education section of this website it says that the seasonality of Natural Gas for:
Alberta Natural Gas is from end of August to end of September and
US Natural Gas is from end of July to end of October.
Would you consider Claymore’s GAS.to to be right now a seasonal play for an Alberta Nat. gas?
September 1st, 2010 at 3:49 pm
For AW and Andrew,
I understood what you were asking Andrew but I wanted to include a tip for you regarding how the Cdn dollar affects where the interlisted stocks go during the day. The point though is that at the end of the day, both the Canadian version and U.S. version of any interlisted stock will be equal to the same price taking into consideration the exchange rate. Thus, with taking that into consideration, if the U.S. AGU rallies, then the AGU.TO cannot decline with any conviction as both stocks are the same stock! So, it really doesn’t matter where the stock is listed as at the end of the trading day, the market makers will ensure that the stock will be worth the same value on both the Cdn exchange as well as the U.S. exchange! So, regardless of what the charts show, the interlisted stocks cannot be doing opposing things on each exchange except to the extent to take into consideration what the U.S. and Canadian dollars are each doing on that particular day. Yes, I saw Don’s response to this question as well on BNN.
Alexa
September 1st, 2010 at 4:12 pm
Hi Jeff. Selection for the gas trade depends upon individual risk/reward parameters.
September 1st, 2010 at 4:14 pm
Hi Andrew. Technicals on AGU are more relevant than technicals on AGU.TO. Control of the stock through greater volume lies in the U.S.
September 1st, 2010 at 4:19 pm
Hi Freddebuoy. Seasonal trade for gold and gold equities is from the third week in July to the end of December. Sweet spot is from the third week in July to the fourth week in September. Preferred strategy for adding to the trade is to wait until short term momentum indicators become oversold. They currently are not close to being oversold. Best to be patient.
September 1st, 2010 at 4:22 pm
Hi Kay. The Labour Day weekend historically has been slightly positive for U.S. equity indices. Success of the trade is less than other U.S. holidays near the end of the month. The next weekend of interest is the Thanksgiving holiday at the end of November.
September 1st, 2010 at 4:24 pm
Hi Nicholas. GAS.TO is an interesting way to play the seasonal trade in natural gas. Technicals turned positive on Tuesday.
September 1st, 2010 at 4:56 pm
Hello! Can anybody tell me what would be a good indicator(s) to use to tell me when gold would be oversold before it goes back up and what point they need to hit before buying back into gold. Example RSI indicator – does it need to hit 20 and lower?
September 1st, 2010 at 5:27 pm
Slava: MFC broke up over 1st resistance at 12.16. This level needs to hold and next price resistance is 13.75 with the downtrendline from April sitting at 14.50 which is also price resistance. That is the significant price pt that needs to be cleared to suggest an uptrend of some substance is at hand. The 50ema is at 14.25 and price is a long ways away and likely to snap back to it. I don’t get into the fundamentals by choice but haven’t heard any serious negatives towards MFC that would threaten its existence. Do you live in Vegas? If so you must be a Canadian as I’ve never come across an American that tracks and trades the TSX based Canadian stocks or pays much attention to anything north of the border for any reason.
September 1st, 2010 at 5:30 pm
Pyara: I don’t know exactly what HNU represents for sure. Thought it was long Nat Gas futures contracts. All I do know is when I see a market is complicated with a lot of questionable practices I avoid it like the plague. I’m a big believer in the K.I.S.S. principle. Seen far too many complicated trades blow up in trader’s faces.
September 1st, 2010 at 6:10 pm
I beg to differ, Alexa.
Yes, AGU (US) and AGU.TO are the same stock at the end of the day. In fact, as you mentioned, due to FX fluctuations, you can get to a result where one shows a MACD crossover and the other does not (and one can hit a new 52-week hi/lo and the other one does not). This is where the US vs. TO debate comes in. A MACD crossover (or any other breakout/breakdown pattern) for AGU (US) is going to be generally more reliable than a MACD crossover for AGU.TO.
Today’s action on AGU is a very good illustration. In the US, we had a “doji” where in Canada, we had a “gravestone doji”. On balance, the more reliable (US) chart is not as “grave” as the Cdn chart.
The way to trade interlisted stocks is to go by where the stock is primarily traded and trade in the currency of the country in which the exchange is located. That will be where the bid-ask spread will generally be the smallest. I am not sure if you trade options, but the bid-ask spread on TMX is much larger than that in the US. FX is only a “secondary consideration” which, as you said, will “equalize” the value of the stock in USD and CAD terms.
IMO, AGU (US) and AGU.TO are definitely not “the same” from a technical analysis perspective.
September 1st, 2010 at 6:42 pm
Kay: Welcome. It depends. Put two charts together and watching it set up basket in the range. Same to other H-things……Good luck..
September 1st, 2010 at 6:56 pm
hi all,
be careful here …. all are watching the 4 year time cycle (mid term election cycle) and the 10 year cycle …. both these cycles forecast an up august and both were wronng! … both are now forecasting a down september … if they can fail in august then they can fail in september … it appears that the forecasted september selling came a month early and occurred in august … put/call ratio at 3.03 and %bulls at 20% … the only place to go from here is up … hard up … and the low is already in for the year … made in early july
September 1st, 2010 at 7:30 pm
Pasquale Reda: That’s what I’ve been seeing for a while now with the S&P tagging 1040 in a bullish Head and Shoulder pattern and rallying each time on very bearish news. And the TSX breaking above its downtrendline last Friday and then blowing through price resistance of the early Aug highs yesterday above 11880. That was also a Fib 61.8% retrace which has now been cleared as well. The bearish sentiment has been extreme for some time now as you also pointed out with the put/Call
ratio or any Index that shows bullish/bearish sentiment. And apparently all the talk show hosts are talking about the imminent stock market crash due to the Hindenburg Indicator including hosts that never talk about stock markets. If that’s not a bullish sign I don’t know what is. I pointed out earlier that I recall the previous recession with the S&P bottoming in Oct 2002 at 770 and ran up to 1015 by July/03 only to sell off sharply into August/03 to 960. I recall everyone predicting a return to the bear market just like now. I posted at that time on a forum that there was a likelihood of a rally in Sept with a low already in with such extreme bearish sentiment and was called insane with everyone looking for short sales. They got their heads handed to them on the rally that saw the S&P 500 run up 200 points to 1160 by March/04. But I’m not concerned about being right or wrong as only the market itself is ever right but I wouldn’t short this market with someone else’s money right now with the bearish sentiment this high. As I said before who is going to be doing the selling………..You can be sure on a continued rally short sellers will be covering shorts and opportunists will be buying and capitalizing on that as well plus technical traders and computer programs also kicking in on the long side.
September 1st, 2010 at 8:51 pm
Ron/BC – You and Pasquale seem to be on opposite side of Don who forecast weakness in September. A lot of others have also forecast a major drop in the markets.
Any idea of an approximate price when gold becomes oversold? Thanks.
September 1st, 2010 at 8:56 pm
I rarely engage in a direct conversation with you, Ron/BC, but your views are quite insightful. Thank you.
September 1st, 2010 at 9:19 pm
Roy: Don and most are referring to the seasonal tendency for Sept to be the worst month of the year and especially bearish in mid term U.S. election years right into October. This is a “typical” trend and not cast in stone like all seasonal trends and historical tendencies that vary. We’ll see soon enough but my point is all the ducks are definitely not lining up for a sell off. Regarding Gold it’s not so much price being oversold as momentum indicators. I don’t use the standard momentum indicators but Don uses regular Stochastic, RSI 14 and MACD 12-26-9 so perhaps he could give his views on oversold levels. I would only be speculating. (Typically Stochastic drop to 20 and turn back up with RSI 14 dropping to 30 and MACD 12-26-9 crosses back up over its signal line from down.)
September 1st, 2010 at 9:29 pm
AW: Thanks. I just try to reflect what the charts are saying regardless of what I may feel. The market doesn’t care what I think or feel or do and the financial news media tends to be directed by people with large positions. So the charts and sentiment along with seasonal trends seem to be the most important factors from my experience. And when too many people get on one side of the boat it tends to tip over. I rarely get caught up in highly popular markets or opinions.
September 2nd, 2010 at 12:10 am
Thanks Ron. I live in Vancouver (White Rock to be exact) – I was in Vegas visiting relatives/looking at some real estate and haven’t had full time access to a computer so far this week (which means I missed quite a few opportunities – oh well). Speaking of Vegas, real estate there is not as depressed as media would like people to believe. In this particular area of town (Summerlin) there were only 5 townhouses available for sale this week. Good homes are selling and the prices are slightly higher than 2009/early 2010. I read an article about a guy cashing half of his equity portfolio for around $1,000,000 and buying 10 single detached homes at $100k each during the depth of the recession last year. Each house is rented for around $1,100 per month – pretty good investment (sorry, this is off topic yet still “investment” related).
September 2nd, 2010 at 10:07 am
Good Morning Don,
I follow your comments on my trading, and holding Yamana Gold. now I have a question about Nat.Gas, your chart shows building base and I am holding HNU.to at $3.83. Where do you get informaion about future contract of natural gas price? In this ETF what do i have to watch, weekly inventory, weather and what eles?I am sure your comments will be helpful. Do you know website that I can use to follow future Natural gas price.
see you at next CSTA Meeting Toronto downtown.
Appreciate your comments.
Thanks
smita