Pre-opening Comments for Wednesday April 11th
U.S. equity index futures are higher this morning. S&P 500 futures added 10 points in pre-opening trade. Index futures are responding to higher than consensus first quarter earnings and revenues reported by Alcoa. Alcoa was expected to report a $0.04 per share loss. It reported a profit of $0.10 per share. Alcoa is up $0.47 to $9.79 in pre-opening trade.
Eldorado Gold added $0.21 to $9.79 after Canaccord upgraded the stock from Hold to Buy. Target price is $19.
UBS initiated coverage on the U.S. retail merchandiser sector. Its top pick with a Buy recommendation is Nordstrom (JWN $53.46).
‘Tis the season for earnings warnings! Nokia fell $0.89 to $4.14 after lower guidance.
Alcoa (NYSE:AA) – $9.79 gained 5.0% after the company reported higher than consensus first quarter earnings and revenues. The stock has a negative technical profile. Intermediate trend is down. Resistance is at $10.92 and at its 200 day moving average at $11.02. The stock recently fell below its 20 and 50 day moving averages. Strength relative to the S&P 500 Index has been negative since the end of January. Short term momentum indicators are trending down. Preferred strategy is to sell into strength closer to its 50 day moving average at $10.18.
Nordstrom, Inc. (NYSE:JWN) – $53.46 is expected to open higher after UBS initiated coverage with a Buy rating. The stock has a positive technical profile. Intermediate trend is up. The stock recently touched an all-time high at $56.75.The stock trades above its 200 day moving average and appears ready to bounce from near its 50 day moving average at $53.10. Strength relative to the S&P 500 Index has been positive since the end of January. Seasonal influences are positive until the end of May. However, short term momentum indicators are trending down. Preferred strategy is to accumulate the stock close to its 50 day moving average at $53.10.
Nordstrom, Inc. (NYSE:JWN) Seasonal Chart
Nokia Corp. (NYSE:NOK) – $4.14 fell 17.7% after the company lowered earning guidance. The stock has a negative technical profile. Intermediate trend is down. The stock is expected to break support at $4.46 at the opening to reach a 14 year low. The stock trades below its 200 day moving average and recently fell below its 20 and 50 day moving averages. Short term momentum indicators are trending down. Strength relative to the S&P 500 Index has been negative since the end of October. Better opportunities exist elsewhere.
The S&P 500 Index continues to show technical weakness. Yesterday, U.S. equity markets came under additional selling pressure when the S&P 500 Index broke below its 50 day moving average. Volume immediately ramped up. Short term momentum indicators continue to trend lower, but already are approaching oversold levels.
The TSX Composite Index continues to follow through its head and shoulders pattern. Weakness has been so substantial during the past week that the Index is now approaching its technical target of 11,687.
Weakness in the energy sector contributed significantly to weakness in the TSX Composite.
Weakness in the materials and industrial sectors on both sides of the border also contributed.
Weakness in industrial commodity prices contributed to weakness in the Materials sector.
The steel sector, a subsector of the Mines and Metals sector was particularly hard hit.
Weakness in energy and industrial commodity prices triggered weakness in the Canadian Dollar. It broke briefly below support at 99.60 U.S. cents.
Investor fears rose on both sides of the border. The VIX spiked again.
Weakness in markets outside of North America contributed. Sovereign debt concerns in Italy and Spain are having an impact.
Weakness spilled into emerging equity markets and Far East markets.
Tech Talk’s Weekly ETF Column
(Published yesterday at www.globeandmail.com)
Headline reads, “Current conditions favour inverse equity ETFs”. Following is a link to the comment:
Following is full text:
Inverse Equity ETFs
Equity markets around the world as well as most major sectors showed technical signs of an intermediate peak last week. “Buy when it snows, sell when it goes” is happening earlier than usual this year, typical of U.S. equity markets in a U.S. Presidential election years and years ending in “2”. Now is a good time to examine Exchange Traded Funds that appreciate when equity markets and sectors enter intermediate downtrends.
Investors have lots of choices. U.S. exchanges list 17 non-leveraged inverse equity ETFs and the Toronto Exchange lists five.
All inverse ETFs are based on short term notes and futures contacts designed to track the inverse performance on a daily basis of an underlying equity or sector index. Management expense ratios tend to be higher than average. Average management expense ratio for the 17 U.S. listed ETFs is 0.96 per cent and average expense ratio for the five Canadian listed ETFs is 1.15 per cent
The most actively traded inverse ETF is Short S&P 500 Proshares (SH $35.97). Institutional investors frequently use this ETF to hedge against a diversified portfolio of U.S. equities that are chosen to outperform the market at a time when the S&P 500 Index technically is overbought.
Other actively traded inverse U.S. equity index ETFs include Short Russell 2000 Proshares (RWM $26.46), Short Dow 30 Proshares (DOG $35.90), Short MSCI Emerging Market Proshares (EUM 29.24), Short QQQ Proshares (PSQ $25.57), Short MSCI EAFE Proshares (EFZ $47.57), Short MidCap 400 Proshares (MYY $27.26), Short Small Cap 600 Proshares (SBB $22.75).
Canadian inverse equity index ETFs include Horizons BetaPro S&P /TSX 60 Inverse ETF (HIX $11.12) and Horizons BetaPro S&P 500 Inverse ETF (HIU $6.92)
U.S. sector inverse ETFs include Short Financials Proshares (SEF $31.33), Short Oil & Gas Proshares (DDG $33.65), Short Basic Materials Proshares (SBM $35.38) and Short KBW Regional Banking Proshares (KRS $45.35).
Canadian sector inverse ETFs include Horizons BetaPro S&P/TSX Capped Financials Inverse ETF (HIF $8.01), Horizons BetaPro S&P/TSX Capped Energy Inverse ETF (HIE $10.58) and Horizons BetaPro Global Gold Inverse ETF (HIG $12.43)
The most controversial inverse ETF is the AdvisorShares Active Bear ETF (HDGE $21.12). The fund holds short positions in an actively managed portfolio of U.S. listed equities.
Don Vialoux is the author of free daily reports on equity markets, sectors,
commodities and Exchange Traded Funds. . Daily reports are
available at http://www.timingthemarket.ca/. He is also a research analyst for
Horizons Investment Management Inc. All of the views expressed herein are his
personal views although they may be reflected in positions or transactions
in the various client portfolios managed by Horizons Investment Management.
FP Trading Desk Headlines
FP Trading Desk headline reads, ”Why the TSX could outperform and what sectors to be in”. Following is a link:
FP Trading Desk headline reads, “Why Spain is in much worse shape than anyone thinks”. Following is a link:
FP Trading Desk headline reads, “Lumber stocks downgraded as spring seasonal trade ends”. Following is a link:
Special Free Services available through www.equityclock.com
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.
To login, simply go to http://www.equityclock.com/charts/
Also, please take advantage of Google ads and other ads available in the data base
Following is an example of EquityClock.com’s seasonality charts:
Agricultural Products Industry Seasonal Chart
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 and Jon Vialoux are research analysts for Horizons Investment Management Inc. All of the views expressed herein are the personal views of the authors and are not necessarily the views of Horizons Investment Management Inc., although any of the recommendations found herein may be reflected in positions or transactions in the various client portfolios managed by Horizons Investment Management Inc
Horizons Seasonal Rotation ETF HAC April 10th 2012
Thackray’s 2012 Investor’s Guide
Thackray’s 2012 Investor’s Guide recently has been released. It can be ordered online from Amazon.ca or Amazon.com at http://www.amazon.ca/gp/product/0978220064/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&tag=timthemar-20&linkCode=as2&camp=15121&creative=330641&creativeASIN=0978220064
It can also be ordered online from Brooke’s website: www.alphamountain.com (book is in stock).