Pre-opening Comments for Wednesday May 9th
U.S. equity index futures are lower this morning. S&P 500 futures are down 12 points in pre-opening trade. Index futures are responding to a spike in Spanish sovereign debt interest rates to over 6.0%.
First quarter earnings continue to pour in. Companies reporting since the close yesterday included Disney, AOL, Enbridge, Tim Horton’s, Dean Foods, Macy’s and Agrium.
Hershey (HSY $67.74) is expected to open higher after Argus upgraded the stock from Hold to Buy. Target is $78.
American International Group added $0.10 to $31.80 after Goldman Sachs upgraded the stock from Neutral to Buy. Target was raised from $31 to $40.
Under Armour gained $0.82 to $93.50 after UBS upgraded the stock from Neutral to Buy. Target price was raised from $100 to $105.
Walt Disney Co. (NYSE:DIS) – $44.30 is expected to open higher after the company reported higher than consensus fiscal second quarter earnings. The stock has a positive technical profile. Intermediate trend is up. The stock is expected to break above resistance at $44.50 to reach an all-time high. The stock trades above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought, but continue to trend higher. Strength relative to the S&P 500 Index has been positive since last September. Seasonal influences currently are positive, but peak at the end of May. Preferred strategy is to accumulate the stock at current or lower prices.
The Walt Disney Company (NYSE:DIS) Seasonal Chart
Agrium, Inc. (NYSE:AGU;TSE:AGU) – US$83.65 slipped 1.1% despite reporting higher than consensus first quarter earnings. The stock has positive technical profile. Intermediate trend is up. Resistance is at $$89.90. The stock trades above its 200 day moving average and just below its 20 day moving average at $86.44 and its 50 day moving average at $85.80. Short term momentum indicators are neutral. Strength relative to the S&P 500 Index has been positive since the middle of December. Seasonal influences currently are not positive. Seasonal influences turn positive in July. Preferred strategy is to accumulate the stock closer to its 200 day moving average at $79.39.
Agrium Inc. (TSE:AGU) Seasonal Chart
Tim Hortons, Inc (NYSE:THI;TSE:THI) – US$57.13 is expected to open lower after reporting lower than consensus first quarter earnings. The stock has a positive technical profile. Intermediate trend is up. The stock reached an all-time high last week. The stock trades above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought, but continue to trend higher. Strength relative to the S&P 500 Index and TSX Composite Index has been positive since mid-February. Preferred strategy is to accumulate the stock on weakness closer to its 50 day moving average at $50.46.
Technical deterioration by major equity indices, sectors and commodities was significant yesterday:
The S&P 500 Index briefly broke support at 1,357.38 to complete a double top pattern.
The Russell 2000 Index briefly broke support at 783.56 to complete a head and shoulders pattern.
The NASDAQ Composite Index briefly broke support at 2,946.04 and 2,900.28.
The NYSE Composite Index briefly broke support to complete a head and shoulders pattern
The MSCI EAFE (Europe, Australia and Far East) Index and its related ETF briefly broke support at $51.65 to complete a modified head and shoulders pattern.
The Athens Index and its related ETF plunged below support at $12.70 to a low not seen since 1992.
The MSCI Emerging Markets Index and its related ETF broke support at $41.07 to confirm an intermediate downtrend.
Weakest sectors included Materials and Semiconductors. Their ETFs broke key support levels.
Gold broke support at $1,613 to reach a five month low.
Tech Talk’s Weekly ETF Column
(Published yesterday at www.globeandmail.com )
Headline reads, “Bottom Fishing in Europe? Don’t do it yet”!
Following is a link to the column
Following is full text
European equity markets have been in turmoil during the past year. Where do they go from here and what Exchange Traded Funds are available?
Prospect for Europe are not encouraging. The S&P Europe 350 Index already has dropped 20.0 per cent from it high in May 2011. The MSCI EMU Index, that excludes participation in United Kingdom shares has plunged 29.5 per cent. Economic prospects in Europe continue to deteriorate. The United Kingdom, Italy and Greece recently re-entered a recession. Austerity programs launched by governments in the United Kingdom, Spain, Portugal, Italy and Greece are curtailing prospects for growth. Elections in France and Greece over the weekend have added to uncertainties.
On the charts, European equity markets have been underperformers during the past year. Their intermediate trend is down, their strength relative to the S&P 500 Index is negative and their short term momentum indicators are trending down. The following chart on iShares on the Europe 350 Index demonstrates:
Seasonal influences are about to turn negative. Seasonal influences on European equity markets are similar to seasonal influences on North American equity markets. Below is a 10 year seasonality chart on S&P Europe 350 Index showing its period of seasonal strength from near the end of October to the beginning of May.
Preferred strategy is to postpone investment in Europe until at least this fall when current economic, political, technical and seasonal uncertainties hopefully will have been resolved.
The easiest way for North American to invest in Europe, when the time is appropriate, is through a wide variety of Exchange Traded Funds. U.S. exchanges list 32 U.S. ETFs ranging from funds that hold a broad basket of European equity securities to funds that hold a narrower basket of securities in individual countries.
Three of the most actively traded broadly based European ETFs are the Vanguard MSCI European ETF (VGK $43.64), iShares, S&P Europe 350 Index Fund (IEV $35.38) and iShares MSCI EMU Index Fund (EZU $28.75). iShares Europe 350 Index Fund holds a basket of large cap European listed equities including equity securities listed in the United Kingdom that represent 36.6 per cent of the portfolio’s weight. The Vanguard MSCI European ETF also holds a basket of large cap European listed equities that includes securities based in the United Kingdom. The Vanguard ETF is more diversified than the iShares ETF and has a slightly lower Management Expense Ratio. iShares on the MSCI EMU Fund holds only securities that trade in Euros and does not hold securities based in the United Kingdom.
Individual country ETFs closely track the performance of well-known equity indices such as the London FT Index, Frankfurt DAX Index and the Paris CAC Index. Following is a list with their symbols:
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 Headline
FP Trading Desk headline reads, “Scotia downgrades nitrogen, upgrades potash”. Following is a link to the report:
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:
Potash Corp./Saskatchewan Inc. (TSE:POT) 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 May 8th 2012