Pre-opening Comments for Wednesday June 6th
U.S. equity index futures are higher this morning. S&P 500 futures are up 7 points in pre-opening trade. Index futures are anticipating comments before a Congressional committee tomorrow by Federal Research Chairman Ben Bernanke on the possibility of a third quantitative stimulus program.
Index futures are higher despite actions by Moody’s to downgrade the credit rating of seven German banks and three Austrian banks.
The European Central Bank maintained its overnight lending rate at 1.0%.
The Euro strengthened and the U.S. Dollar weakened on overnight news. Commodity prices rose on U.S. Dollar weakness.
Revised first quarter productivity slipped to -0.9% from a previous estimate of -0.5%. Consensus was -0.7%.
Facebook added $0.30 to $26.17 after JMP Securities initiated coverage on the stock with an Outperform rating. Target is $37.
UnitedHealth added $0.85 to $56.89 after announcing a share buy-back and a dividend increase.
Pulte Group improved $0.26 to $8.42 after Credit Suisse upgraded the stock from Neutral to Outperform. Target is $11.
Tempur-Pedic plunged $18.93 to $24.74 after the company cut its earnings guidance.
Unitedhealth Group, Inc. (NYSE:UNH) – $56.89 added 1.5% after increasing its dividend and announcing a share buy-back program. The stock has a positive technical profile. Intermediate trend is up. Support is at $53.78 and resistance is at $59.71. The stock trades above its 200 day moving average and moved above its 20 day moving average yesterday. Short term momentum indicators are trending higher. Strength relative to the S&P 500 Index has been positive since mid-November. Preferred strategy is to accumulate the stock at current or lower prices.
PulteGroup, Inc. (NYSE:PHM) – $8.42 added 3.2% after Credit Suisse upgraded the stock from Neutral to Outperform. Target is $11.00. The stock has a mixed technical profile. Intermediate trend is neutral. Support is at $7.63 and resistance is at $10.82. The stock trades above its 200 day moving average, but below its 20 and 50 day moving averages. Short term momentum indicators are trending down. Strength relative to the S&P 500 Index turned negative at the end of April. Seasonal influences are mixed in June, but turn positive in July. Preferred strategy is to accumulate the stock on weakness closer to its 200 day moving average at $6.96.
Pulte Homes, Inc. (NYSE:PHM) Seasonal Chart
Quiet day yesterday prior to news later this week (e.g. Eurozone meeting, Bernanke’s testimony).
· The S&P 500 Index is bumping its head on its 200 day moving average.
· The NASDAQ Composite Index managed to move back above its 200 day moving average.
· The TSX Composite Index is showing signs of outperformance relative to the S&P 500 Index for the first time since last September. Seasonal influences for the TSX Composite Index relative to the S&P 500 Index is positive until mid-July.
Adrienne Toghraie’s “Trader’s Coach” Column
After a Trading Loss
By Adrienne Toghraie, Trader’s Success Coach
Everything bad that has ever happened in our lives has a loss associated with it. This is why a loss in trading can be so painful. It is not only the loss that is immediately at hand, but it is also the accumulation of all the losses that are in a dark place in your neurology.
In your life you have experienced various intensities of loss. It is how a person recovers from a loss that makes the difference in the way he or she will interpret other losses the rest of their life.
Here are examples of the way you can experience the aftermath of a trading loss:
· You might experience the five levels of grieving – shock, disbelief, anger, acceptance, and recovery. This is a good thing, because those who do go through this process will less likely endure that loss as part of the accumulation of other losses.
· You can put yourself in a loop of re-experiencing several of the loss feelings. When you are in a loop, it builds the intensity of that loss and can make it a permanent scar.
· You can bury the feelings leaving those feelings to be reborn in other future experiences of loss.
· You can go through the process of the pain of loss very quickly gaining valuable knowledge from having the experience of that loss and move on without having the need to carry that pain with you.
· You can go through the pain and decide to do good things to benefit others as a way of recovering from it. In doing so, the feeling transforms into a good feeling about the benefits you are giving to others.
Yes, I understand that you can name horrible, devastating losses that seem insurmountable, and I would empathize with you that from having that experience it would be difficult to carry on, but what are the alternatives? You can make it worse, do the best with what you have, or decide that you will survive and thrive.
Could it get any worse?
Lenny lived a difficult life on a farm with both parents being alcoholics. Lenny was fortunate to have a basketball coach who was tough, but gave him the guidance that would eventually be his salvation.
Coach Bob liked to dabble in the commodities market and invited several of the boys to his home to teach them how they could hedge their crops. Lenny was the only one of his group who carried on to learn the markets. He thought of the time he spent with Coach Bob and his wife as his real home. They unofficially adopted him as their son.
Things at Lenny’s parent’s farm started a downward spiral when there was a major storm that flooded the crops. Lenny’s family lost the farm, his father died of a heart attack and his mother had to accept welfare.
Lenny became exceptionally good at his ability in the markets and Coach Bob set up an account for him of ten thousand to trade. The profits would be split, which would give some financial relief to Lenny and his mother. Coach Bob set up a scholarship fund to supplement the living expenses that Lenny needed even with the scholarship that Lenny received from playing basketball.
Coach Bob picked up Lenny on a holiday from college when he was in his last year. Lenny took over the wheel of the car and there was a head-on collision. Coach Bob died, and Lenny became paraplegic.
I spoke with Lenny on the phone after he attended one of my webinars. His voice was vibrant. His Trader Evaluation was dramatic. What he was looking for was more consistency in his trading. He earned a good living as a trader and married his physical therapist who had two children. What he could not understand was why losses were so painful, even the small ones.
The more you interpret a negative feeling as being a loss, the more you have to allow yourself to go through the stages of grief. If you do not, then your profits will suffer from the sabotage that you incur in your trading. At the other side of that loss there can be a healing that takes you to a higher place if you can find a way to make that loss have a positive outcome for your overall life.
Free Webinar Presented by Adrienne Toghraie
“Modeling Success Qualities of Top Traders”
Tuesday, June 12th at 4:30 pm (NY time)
Using and Trading VIX Volatility Derivatives Futures Options ETF’s and ETN’s
presented by Lawrence G. McMillan
Wednesday, June 6th @ 7:00 pm ET (5:00 GMT)
The newest asset class – volatility – has only had listed trading instruments since 2004, when VIX futures were listed on the CBOE Futures Exchange. The growth of derivatives and related products has been tremendous, and these products should be understood and utilized by most traders.
This seminar will cover the basics of VIX futures and options. While they are useful for speculation, their usage is better in spreads and as clues to broad stock market direction. Strategies will be described that take advantage of spreading opportunities that often arise.
In recent years, ETNs and ETFs on these products have proliferated. Descriptions of the basics of the most liquid of these will be given, along with advice on what to avoid and what to look for when trading this somewhat misunderstood aspect of the volatility space. Finally, it will be shown how to use these products to protect a portfolio of stocks.
· The CBOE has called VIX options the single most successful product ever listed.
· VIX derivatives, while extremely useful, are not necessarily straight forward.
· Learn the basics of VIX futures, options, and ETNs.
· Proper valuation of VIX options.
· Use VIX derivatives to protect a stock portfolio.
· Recognize when to use highly profitable spread strategies.
About the Presenter: Lawrence G. McMillan is the author of Options As a Strategic Investment, the best-selling work on stock and index options strategies. He currently authors a unique daily advisory service – Daily Volume Alerts – and also edits and publishes "The Option Strategist", a derivative products newsletter covering equity, index, and futures options. In these capacities, he is the President of McMillan Analysis Corporation, which he founded in 1991. He has spoken on option strategies at many seminars and colloquiums in the United States, Canada, and Europe. In addition, he trades his own account actively, and he manages option-oriented accounts for certain individuals.
Mr. McMillan is the recipient of the Sullivan Award for 2011, awarded by the Options Industry Council in recognition of his contributions to the Options Industry.
Prior to founding his own firm, Mr. McMillan was a proprietary trader at two major brokerage firms – Thomson McKinnon Securities and Prudential-Bache. He initially worked for Bell Telephone Laboratories in Whippany, NJ, from 1972 to 1976. Mr. McMillan holds a B.S. degree in mathematics from Purdue University (1968) and an M.S. in applied mathematics and computer science from the University of Colorado (1972).
FP Trading Desk Headlines
FP Trading Desk headline reads, “Why QE III might still be needed despite low Treasury Yields”. Following is a link to the report:
FP Trading Desk headline reads, “Bottoming process can begin: Canaccord Strategist”. Following is a link to the report:
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RUSSELL 2000 Index (^RUT) 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 June 5th 2012