Tech Talk for Monday October 22nd 2012

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Pre-opening Comments for Monday October 22nd

U.S. equity index futures are higher this morning. S&P 500 futures are up 2 points in pre-opening trade. Index futures are responding to encouraging electoral results in Spain that are expected to lead the way to resolution of Spain’s sovereign debt crisis.

Third quarter earnings reports continue to pour in. Companies reporting this morning included VF Corp., Hasbro, Sun Trust, Caterpillar, Peabody and Freeport McMoran Copper & Gold.

Progress Energy Resources (PRQ $21.65 Cdn.) is expected to open lower after the Canadian government blocked its takeover by Petronas. However, Petronas noted overnight that it is willing to negotiate with the Canadian government to ensure sufficient economic benefit for Canada.

Canadian Pacific (CP $89.41 Cdn.) is expected to open lower after BMO Capital downgraded the stock from Outperform to Market Perform.

Talisman (TLM $13.04 Cdn.) is expected to open lower after Canaccord downgraded the stock from Buy to Hold.

Equity Residential (EQR $57.13) is expected to open lower after Goldman Sachs downgraded the stock from Neutral to Sell.

Cliffs Natural Resources dropped $0.45 to $44.00 after Deutsche Bank downgraded the stock from Buy to Hold.

 

Technical Watch

Cliff Natural Resources Inc. (NYSE:CLF) – $44.00 slipped 1.0% after Deutsche Bank downgraded the stock from Buy to Hold. The stock has an improving technical profile. Intermediate trend is neutral. However, the stock completes a reverse head and shoulders pattern on a break above $46.83. The stock trades above its 20 and 50 day moving averages. Strength relative to the S&P 500 Index has been positive since the beginning of September. However, short term momentum indicators are overbought. Preferred strategy is to accumulate the stock on weakness closer to its 20 day moving average at $40.73.

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Peabody Energy Corp. (NYSE: BTU) – $27.65 added 6.8% despite releasing lower third quarter earnings. The stock has a positive technical profile. Intermediate trend is up. The stock recently completed a reverse head and shoulders pattern. The stock trades above its 20 and 50 day moving averages. Short term momentum indicators are overbought, but have yet to show signs of peaking. Strength relative to the S&P 500 Index turned positive in mid-July. Seasonal influences currently are positive. Preferred strategy is to accumulate the stock at current or lower prices.

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Peabody Energy Corporation (NYSE:BTU) Seasonal Chart

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Economic News This Week

Canada’s Overnight Lending Rate to be announced on Tuesday at 9:00 AM EDT is expected to remain unchanged at 1.00%.

September New Home Sales to be released on Wednesday at 10:00 AM EDT are expected to increase to 385,000 from 373,000 in August.

Results of the FOMC meeting to be released on Wednesday at 12:30 PM EDT are expected to hold the Fed Fund rate at 0%-0.25%.

Weekly Initial Jobless Claims to be released on Thursday at 8:30 AM EDT are expected to decline to 375,000 from 388,000 last week.

September Durable Goods Orders to be release on Thursday at 8:30 AM EDT are expected to increase 7.4% versus a decline of 13.2% in August. Excluding transportation, Orders are expected to increase 1.0% versus a decline of 1.6% in August.

The first estimate of third quarter real annualized GDP growth to be released on Friday at 8:30 AM EDT is expected to improve to 1.9% from 1.3% in the second quarter.

The final October Michigan Sentiment Index to be released on Friday at 9:55 AM EDT is expected to remain unchanged at 83.1.

 

Earnings News This Week

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Equity Trends

The S&P 500 Index added 4.60 points (0.32%) last week. Intermediate trend is down. The index fell below its 20 and 50 day moving averages on Friday. Short term support at 1,425.53 is being tested. Short term momentum indicators have recovered to neutral levels.

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Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 58.00% from 53.00% despite the decline in Friday. Percent remains intermediate overbought and trending down.

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Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 70.40% from 67.40%. Percent remains intermediate overbought and trending down.

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The ratio of S&P stocks in an uptrend versus a downtrend (i.e. Up/Down ratio slipped last week to (305/108=) 2.82 from 3.05.  Sixty nine S&P stocks broke resistance and 41 stocks broke support.

Bullish Percent Index for S&P 500 stocks slipped to 76.20% from 76.40% and remained below its 15 day moving average. The Index remains intermediate overbought and trending down.

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The Up/Down ratio for TSX Composite stocks slipped last week to (144/69=)2.09 from 2.48.  Nineteen stocks broke resistance and twenty stocks broke support.

Bullish Percent Index for TSX Composite stocks slipped last week to 68.27% from 67.89% and remained below its 15 day moving average. The Index remains overbought and showing signs of rolling over.

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The TSX Composite Index gained 213.94 points (1.75%) last week. Intermediate trend is neutral. Short term support is forming at 12,137.18 and resistance exists at 12,529.77. The Index bounced nicely from near its 50 day moving average and moved above its 20 day moving average. Short term momentum indicators are trending higher despite the decline on Friday. Strength relative to the S&P 500 Index has changed from neutral to positive.

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Percent of TSX stocks trading above their 50 day moving average increased last week to 57.83% from 55.69% despite the drop on Friday. Percent remains intermediate overbought and trending down.

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Percent of TSX stocks trading above their 200 day moving average increased last week to 59.04% from 57.32%. Percent remains intermediate overbought and trending down.

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The Dow Jones Industrial Average added 15.46 points (0.12%) last week despite the fall last week. Intermediate trend is neutral. Resistance is at 13,661.87 and short term support at 13,296.43 is being tested. The Average fell below its 20 and 50 day moving averages on Friday. Short term momentum indicators have recovered to neutral levels. Strength relative to the S&P 500 Index remains neutral.

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Bullish Percent Index for Dow Jones Industrial Average stocks fell last week to 76.67% from 80.00% and remained below its 15 day moving average. The Index remains intermediate overbought and has started to trend down.

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Bullish Percent Index for NASDAQ Composite stocks fell last week to 56.88% from 57.69% and remained below its 15 day moving average. The Index is intermediate overbought and trending down.

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The NASDAQ Composite Index fell 38.49 points (1.26%) lasts week following release of a series of disappointing third quarter reports by companies in the technology sector. Intermediate trend is down. The Index remains below its 20 and 50 day moving averages. Short term momentum indicators are oversold, but have yet to show signs of recovery. Strength relative to the S&P 500 Index remains negative.

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The Russell 2000 Index slipped 2.09 points (1.26%) last week. Intermediate trend is down. Resistance is at 868.50. The Index fell below its 20 and 50 day moving averages on Friday. Short term momentum indicators are neutral. Strength relative to the S&P 500 Index remains negative.

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The Dow Jones Transportation Average added 37.53 points (0.74%) last week. Intermediate trend is neutral. Support is at 4,870.74 and resistance is at 5,231.15. The Average remains above its 20 and 50 day moving averages. Short term momentum indicators are trending up. Strength relative to the S&P 500 Index remains positive. Seasonal influences are positive.

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The Australia All Ordinaries Composite Index gained 70.78 points (1.57%) last week. Intermediate trend is up. The Index remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought, but have yet to show signs of peaking. Strength relative to the S&P 500 Index remains positive.

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The Nikkei Average added 468.56 points (5.49%) last week. Intermediate trend is neutral. Support is at 8,488.14 and resistance is at 9,288.53. The Average moved above its 20 and 50 day moving averages. Short term momentum indicators are trending up. Strength relative to the S&P 500 Index has been negative, but is showing signs of change.

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The Shanghai Composite Index added 23.37 points (1.11%) last week. Intermediate trend is down. Support is at 1,999.48 and resistance is at 2,145.00. The Index remains above its 20 and 50 day moving averages. Short term momentum indicators are trending up. Strength relative to the S&P 500 Index remains positive. Seasonal influences are about to turn positive.

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The Europe 350 ETF added 0.70 (1.90%) last week. Intermediate trend is up. Support is at 36.43 and resistance is at $38.55. Units remain above their 20, 50 and 200 day moving averages. Short term momentum indicators are trending up, but showing early signs of change. Strength relative to the S&P 500 Index remains positive.

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The Athens Index gained another 45.78 points (5.54%) last week. Intermediate trend is up. The Index remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought, but have yet to show significant signs of peaking. Strength relative to the S&P 500 Index remains positive.

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Currencies

The U.S. Dollar slipped 0.03 (0.04%) last week despite the strong gain on Friday. Intermediate trend is neutral. Support is at 78.60. The Dollar remains below its 20, 50 and 200 day moving averages. Short term momentum indicators are mixed.

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The Euro added 0.69 (0.53%) last week despite the sharp drop on Friday. Intermediate trend is neutral. Resistance is at 131.72. Short term momentum indicators are mixed. The Euro remains above its 20, 50 and 200 day moving averages.

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The Canadian Dollar dropped 1.43 cents U.S. (1.40%) last week. Intermediate trend changed from up to down. The Canuck Buck fell below its 20 and 50 day moving averages. Short term momentum indicators are trending down.

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The Japanese Yen fell 1.41 (1.11%) last week. Intermediate trend changed from up to down on a break below support at 126.72. Short term momentum indicators are trending down. The Yen remains below its 20 and 50 day moving averages and fell below its 200 day moving average.

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Commodities

The CRB Index slipped $0.50 (0.16%) last week. Intermediate trend is up. Support is at $302.45 and resistance is at 321.36. The Index remains above its 200 day moving average and below its 20 and 50 day moving averages. Strength relative to the S&P 500 Index remains neutral/slightly negative.

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Gasoline fell $0.22 (7.59%) last week. Intermediate downtrend was confirmed on a break below support at $2.703. Gasoline remains below its 50 and 200 day moving averages and fell below its 20 day moving average. Short term momentum indicators are trending down. Strength relative to the S&P 500 Index turned negative.

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Crude Oil fell $0.92 (1.01%) last week. Intermediate trend is neutral. Support is indicated at $87.70. Crude remains below its 20, 50 and 200 day moving averages. Short term momentum indicators are mixed. Strength relative to the S&P 500 Index remains negative.

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Natural Gas slipped $0.02 (0.56%) last week. Intermediate trend is up. Gas remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are overbought and showing signs of peaking. Strength relative to the S&P 500 Index remains positive.

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The S&P Energy Index slipped 10.48 points (1.93%) last week. Intermediate trend changed from down to up on a break above 558.74. The Index remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are mixed. Strength relative to the S&P 500 Index changed from negative to neutral.

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The Philadelphia Oil Services Index added 8.14 points (3.68%) last week. Intermediate trend is neutral. The Index moved above its 20, 50 and 200 day moving averages. Short term momentum indicators are trending up. Strength relative to the S&P 500 Index has turned neutral.

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Gold lost another $33.00 per ounce (1.88%) last week. Intermediate trend is up. Gold remains below its 20 day moving average and above its 50 and 200 day moving averages. Short term momentum indicators are trending down. Strength relative to the S&P 500 Index has changed from positive to at least neutral. Seasonal influences are negative in the month of October.

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The AMEX Gold Bug Index added 0.16 (0.03%) last week. Intermediate trend changed from up to down on a break below support at $489.51. The Index remains below its 20 day moving average and above its 50 and 200 day moving averages. Short term momentum indicators are trending down. Strength relative to gold remains slightly negative.

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Silver fell $1.38 per ounce (4.12%) last week. Intermediate trend is up. Silver remains below its 20 day moving average and moved below its 50 day moving average. Short term momentum indicators are trending down. Strength relative to gold remains negative.

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Platinum plunged $33.80 (2.04%) last week. Intermediate trend is up. Resistance is at $1,734.50. Platinum remains above its 50 and 200 day MAs and below its 20 day MA. Short term momentum indicators are trending down. Strength relative to gold remains positive.

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Palladium fell $5.95 (1.80%) last week. Palladium remains below its 20, 50 and 200 day moving averages. Strength relative to gold remains neutral.

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Copper fell $0.06 per lb. (1.62%) last week. Intermediate trend changed from up to down on a break below support at $3.681. Short term momentum indicators are trending down. Strength relative to the S&P 500 Index has changed from positive to neutral.

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The TSX Global Metals and Mining Index gained 28.75 points (3.17%) last week. Intermediate trend is up. The Index remains above its 50 day moving average and moved above its 20 day moving average. Short term momentum indicators are trending up. Strength relative to the S&P 500 Index has turned positive.

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Lumber gained $14.55 (4.95%) last week. Intermediate uptrend was confirmed on a move above $312.44. Lumber remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are trending higher. Strength relative to the S&P 500 Index is positive.

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The Grain ETN added $0.68 (1.17%) last week. Intermediate downtrend was confirmed on a break below support at $57.52. Strength relative to the S&P 500 Index remains negative.

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The Agriculture ETF was unchanged last week. Intermediate trend is up. Resistance is at $53.19. Units remain above their 50 and 200 day moving averages, but fell below its 20 day moving average on Friday. Short term momentum indicators are mixed. Strength relative to the S&P 500 Index remains neutral.

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Interest Rates

The yield on 10 year Treasuries increased 10.5 basis points (6.31%) last week. Intermediate trend is up. Support is at 1.599% and resistance is at 1.892%. Yield found resistance near its 200 day moving average. Short term momentum indicators are trending up.

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Conversely, price of the long term Treasury ETF fell $2.23 (1.80%) last week.

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Other Issues

The VIX Index added 0.92 (5.70%) last week. Intermediate trend changed from down to up on Friday on a break above resistance at 17.08.

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Third quarter reports will dominate action in equity markets this week as they did last week. As of Friday, 116 S&P 500 companies had reported results. Earnings on a year-over-year basis were down 3.7%. Revenues were up 1.3%. Sixty companies reported higher than consensus earnings, 13% reported earnings in line with consensus and 26% reported less than consensus earnings. Responses to reports were significant in both directions. The focus this week moves from technology and financial service companies to consumer staples, industrial, materials and health care companies.

Intermediate technical indicators generally remain overbought. However, short term technical indicators (particularly Stochastics for broadly based equity indices and sectors recovered from oversold levels and recorded short term buy signals. Most broadly based equity indices and sectors with the exception of technology showed early signs of bottoming a week ago. Some had a rather severe test of their lows on Friday (e.g. Dow Jones Industrial Average). If the lows hold, the stage is set for a significant upside move between now and Inauguration Day in the third week in January. If the lows do not hold, downside risk is limited and will provide an opportunity to accumulate equities at slightly better prices.

Economic news this week generally is expected to be favourable. The focus is on the FOMC meeting. Bernanke will want to confirm that the Fed continues to provide monetary stimulus.

Macro events this week outside of North America will continue to impact equity markets. Weakness on Friday was attributed to failure of the European Union to reach a concrete agreement to resolve the sovereign debt crisis. More news on the topic is expected this week. Meanwhile, European economic data (e.g. Eurozone manufacturing PMI) is expected to show early signs of a bottom.

Cash positions held by corporations and individuals are huge and growing. Cash positions will start to be employed when the next President is determined and when the Fiscal Cliff is resolved (regardless of whom becomes President).

 

The Bottom Line

The entry point for the seasonal trade in North American equity markets (on Average during the past 61 years: October 28th) either was reached at the beginning of last week or will appear this week. Preferred strategy is to accumulate equities and Exchange Traded Funds with favourable seasonality at this time of year that already are showing technical signs of performing with or better than the market (i.e. S&P 500 for U.S. equity markets and TSX Composite for Canadian equity markets). Sectors include agriculture, forest products, transportation, industrials, steel consumer discretionary, China and Europe.

 

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/

Following is an example:

 

Sugar Futures (SB) Seasonal Chart

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The latest weekly update on ETFs in Canada to October 20th is available at

http://www.etfinsight.ca/

 

Tom Rogers’ Weekly Elliott Wave Blog

Following is a link:

http://www.tomrogers.net/signpost.htmimage

 

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 October 19th 2012

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27 Responses to “Tech Talk for Monday October 22nd 2012”

  1. Tawny Says:

    Tony

    WOW, glad I held on to my BTU – sold at a 25% profit awhile ago – I just checked and discovered I bought it only 2 weeks ago. Oh, why can’t all my trades be like that. Or like GREK 56% in 2 months. Why don’t I put ALL my money on such big winners? Guess everyone wishes same!

    Hey, have to admit that I have lots of little paper losers in my portfolios too. A couple that are even a fair size. I wonder if one should just watch the ones that are gaining well and move more into them? But then the game is suppose to be diversification. Just chatting to myself. :)

  2. Tawny Says:

    Sharing – Swanson has done well by me… he is “value investing.” Feels that there are better opportunities than in the U.S. He does ramble – but I value his words as he has been very successful.

    http://wallstreetwindow.com/node/7027

  3. Canuck2004 Says:

    #1 Tawny- dump your losers and add to your winners. Keep a trailing stop on your winners so you won’t lose your gains.

  4. Tawny Says:

    Canuck

    Thanks for your view…. you don’t sell your dividend stocks because they are down a little bit, do you? But, generally speaking I think this is great advice.

    I am really thinking of moving most US$ holdings outside the US – Europe in particular where stocks have already, most likely, botttomed. As Swanson pointed out, Europe has been going up even when US is down… with fiscal cliff on the horizon, maybe a good idea to be overseas.

  5. Tawny Says:

    Another chart to share —

    Update for October 22: Where is the balance of power now?
    At the end of each trading day, we measure how many stocks have positive strength and how many have negative strength.

    http://www.stocktiming.com/Monday-DailyMarketUpdate.htm

  6. Canuck2004 Says:

    #4-Tawny

    No I don’t. In my RRSP, I only look at the portfolio once a day to see what yield has come in…I don’t care about the stock prices.

    However, in my Margin account, if anything is down 5-6% I dump it and replace it with a better pick or add to a winner…I don’t hold on to losers in there, yield or no yield…..I’m running maximum margin most of the time.

    For me, unless you are very familiar with Europe…I would stay away. Trade what you know, as Buffet has said many times…For me, CAN or USA is as far as I will go. Being able to find info, news, opinions, on any stock is more important than the possibility of making a gain on foreign soil.

    Bottom line: it has been known for an investor to make his or her fortune trading only ONE stock over and over again. Quantity of names is not important for cap gains, only for yield security. Like Buffet said, better to have very few eggs in one basket and watch it very carefully….

    For me, I keep trading the same stocks over and over again, as it takes time to get to know your stock… each one has a different personality and will trade in a particular pattern over time. Better to focus on a few names then go chasing new names all the time.

  7. Freddebuoy Says:

    This I am curious about:

    The Canadian government announced their decision on PRQ on Friday night, well after the markets closed. Can anybody explain why then, there were almost 10,000,000 shares traded on Friday, 5 times the normal volume, with prices down .87%?

    Nefarious? Or is this the opposite of “buy the rumour”?

  8. tomC Says:

    PIC.A
    Does anyone know of this mutual fund or understand how this funds pays a 13% distribution when its holdings (CAD banks) pays only 5% in dividends

  9. Brian/ON Says:

    Freddebuoy

    Nefarious? Traders? Insider news? no, can’t be. (sarcasm). However, I do beleive that they had a deadline that was upcoming (maybe Friday) so the markets may have moved on any lack of info heading into the last few hours of the deadline for the Govt to approve or not.

    Brian

  10. Brian/ON Says:

    American bulls came up with SUE.to, sulliden gold, as a confirmed buy today. TD has 6 analysts on it, 3 buys, 3 holds. Mines in Quebec (good) and their largest asset is in Peru(difficult, to bad). Only insider buys in the last insider trading report.

    Graph looks like they’ve had a long run down, but maybe bottoming?

    Brian

  11. Tawny Says:

    Canuck

    Thanks for your views again. Most of my holdings that are down a little are dividend paying stocks. And I am happy to hold for now.

    As for Europe, I can read the charts, understand the situation. NOt buying so much stocks as ETFs… can’t knock success :)

    I am not wanting to be a trader… buying value and holding, if possible. Time will tell. AT the moment, save for 2 Tech stocks, I am quite happy with my overall portfolio. Waiting for things to settle before I use margin in my non-registered acct.

    Canuck, can I ask how many holdings do you have? You mention holding no more than 5% in one stock in your retirement dividend accounts. Do you hold 5% in EACH PORRTFOLIO, or 5% of TOTAL PORTFOLIO HOLDINGS. Thanks for sharing.

  12. Canuck2004 Says:

    #11-Tawny

    In my RRSP I have around 40 holdings, or so. My MAXIMUM holding in any ONE name is 5%. I have a lot of holdings at 2.5% or less in this portfolio and have no issues in having a 1% position. As a general rule….the higher the yield the higher the risk, so the higher the risk the smaller the position…

    In my MARGIN I have around 20 names right now, but am running 200%, so 100% on margin….which is about normal for me. All around the same amount of % except for a few that I am more aggressive on. I more or less ignore my % rule in this account. However I tend to have 50% of the holdings in stable yield stocks, and 10 or less in more aggressive names, with perhaps one or two very aggressive names. Changes all the time, but this is the formula more or less …. always depends on market conditions.

  13. kam Says:

    Hi Canuck,
    I am holding Artis REIT(ax/un)Where you see it going. I am little underwater but with another 9 cents coming soon I will be in green if we hold here.
    Re- very aggressive stocks. have you ever try playing with volatility? I got loaded on xiv today around $17.17. Just for the last minutes runup in stocks. Sold half at $17.35-17.42 and holding rest for tomorrow. Fingers crossed though. It could open at $18 or $16.80 tomorrow. Wish I can trade in after hours in US like Slava said once that her canadian broker allowed her to do that. It is trading at $17.55 after hours .I would like to drop another 25% of holding of xiv. However chart says to hold on.SPX might have found support here and vix are high(comparing with where they been lately) and hour chart on SPX/XIV might have bottomed for now.

  14. kam Says:

    Tawny,
    Good job on your BTU holding. Did you already got out of it fully? I think Whiteside talked about it if I am not mistaken , is that time you bought it too? I am holding KOL and when I heard that peabody is coming with earning today I was little nervous but when I saw spx struggling in the morning and saw KOL trading above $26 I knew a BTU must be on ‘rocket’ eerrr ‘coal” fuel after earning :) . hope you are still holding at least half or so.

  15. Canuck2004 Says:

    13-kam

    Don`t worry about Artis REIT; it`s a good one. Just forget about it and envoy the yield. I am slowly buying back all the REITS I sold at higher prices in my margin account back in early August… today Dundee is getting cheap again… but chart looks negative for a couple days yet… I will buy it back this week sometimes. This an excellent name. I have owned it since the teens. Good grower.

    Of course in my RRSP I don`t trade them, just add or trim occasionally to keep my percentage in check.

    No, not XIV… way too much work for me. I`m too busy.

    In my margin account, my trading account, I`m slowly getting set up for the seasonal Winter bull until the Spring….fine tuning as I go along. I buy and hold for a few months, on margin, no stops. Anything hairy I keep small…. I can sleep at night with that and no worries.

  16. Tawny Says:

    Canuck

    Re #12 – thank you for sharing your percentages etc. I too have quite a few smaller holdings… wondered sometimes if I am over-diversified. But it is working – I can confirm tomorrow, but I think my portfolios as a whole are either up a little or breakeven, on a down day I am happy for that.

  17. Tawny Says:

    Kam

    Sold my BTU in full – 25 % return is very nice… Don’t want to be a slaughtered pig. I picked up the seasonal trade again from

    http://charts.equityclock.com/peabody-energy-corporation-nysebtu-seasonal-chart

    as I did last year. If Romney is strong in the debate tonight, coal may flicker more tomorrow. I was just happy with my profit and want to have some more cash available. May buy back again. Or not :)

    Hope KOL continues well for you!

  18. kam Says:

    Hi Canuck,
    Thanks for reply. I actually bought reit after reading your comments about them.In general what is your view on them going forward a year or two. Didn’t they all got bid up since last OCT by people looking for yield? Seems like after QE3 announcement money is slowly leaving them into risk on stocks. Wouldn’t that be lower lows for them you think going forward.
    here is a chart of xre.to and ratio chart of xre with spx. It is under performing spx since end of July along with MACD and CCI mostly down. Would that mean money might be leaving reits until that ratio changes? comments//
    http://stockcharts.com/h-sc/ui?s=XRE.TO&p=D&yr=1&mn=0&dy=0&id=p30741208428

  19. Canuck2004 Says:

    18-Kam

    REITS were just getting overbought, that`s all. I bought a bunch earlier this year, and sold them when they were too rich for my liking. Now that they have cooled off a bit, I`m buying them back. That`s all there is too it.

    I came across this interesting article about balance sheet market corrections and long term interest rates… very worthwhile to read. I think this guy maybe right on. IF that is the case, we will have super low interest rates for quite a few years… a decade or more from here. This is excellent for yield investors.

    http://hoisington.com/

    click on: Economic Overview button on left.

    then on SECOND QUARTER; it`s about interest rates, so it concerns anyone who is interested in yield investing. Worth reading.

    16-Tawny

    I think 40 names for a yield account is about maximum… but that`s for me. Anymore and it gets difficult to manage. On the other hand, less chances of getting torpedoed by one stock…lol…so it guarantees your average yield cash flow. In addition, it will keep your account steady in rough times… and after a while you will start getting traction as the yields compound….but it takes time.

  20. Tawny Says:

    Canuck

    Re #19 – thanks again. I have around 30 holdings spread over 5 accounts, 4 reg’d, one not. This is as much as I can handle. For sure the yield accts are less volatile. From here on, I will sell an account if I want to introduce a new holding. Or, will add to existing holdings. May bridge for short terms only. ie Keep an extra holding for a few days and decide which one gets the axe!

  21. Canuck2004 Says:

    20-Tawny… 5 accounts seems like a lot to me, I keep only 2: RRSP and MARGIN. At one time I used to have both at the same place, Wood Gundy, but I decided years ago it was safer and more advantageous for access to research to split them up.

    I was thinking several years ago of setting up a 3rd account for penny stocks only… seed it with a little mad money and see where it goes….but never got around to it. I also wanted it at another bank so I could get access to more research.

    My RRSP is very steady…and up about 20% since last year… but at this stage, it`s the monthly compound yield effect more than anything else…. by buying more yield stocks with the yield coming in. But since last June I`ve been collecting and piling up the cash flow as I am retired now… and it`s driving me nuts. I`m used to buying or adding every month… a hard habit to break after a few decades….lol

  22. kam Says:

    Hi Canuck,
    “REITS were just getting overbought, that`s all. I bought a bunch earlier this year, and sold them when they were too rich for my liking. Now that they have cooled off a bit, I`m buying them back. That`s all there is too it.”

    How do you decide that a reit is overbought/stretched other than looking at chart? Do you sell them when Yield has fallen below certain %(like below 3% when price keep going up). will like to sure know more when to sell these and sit tight.
    One question is regarding monthly distri. you get from them. If it is in RRSP account than you have to pay divi tax on it OR not. Just want to know as you talked about compounding effect you get on them.
    If if late now than can answer later. no hurry.

  23. Canuck2004 Says:

    22.kam

    1) No tax in RRSP from CAN or US dividend…all tax free. However when you take the money out, it is fully taxable at your current tax rate… so no dividend tax credit, taxed as cash income…but it is expected that you take it out when you are retired and your income is lower…if you are smart about it, there will be no tax to pay then either. Need tax write off, like capital losses.

    2)REITs, it`s a combo…historical valuation as I know these stocks very well… the charts, and an alarming lower yield. A REIT yield should be about 2% above the Canada 10 year Bond for the risk involved. When the spread gets too tight, overvalued time to sell. However in my RRSP I hold them forever.

  24. kam Says:

    Thanks Canuck,
    I didn’t know that tax part. Do you know if one buy a divi stock in TFSA is it taxed or not. Most likely it is but I don’t know.I don’t have a rrsp trading account yet. Do you use drip or just collect mula and buy other stocks. Thanks again for fast answer. I know you are still in Richmond.
    Ntr- If you have shaw hd box they are showing frames of Vancouver pics at the moment Ch222. Unbelievable/ No wonder house prices are too high here.

  25. Wendy Says:

    tomC – I don’t know about the mutual fund you mentioned, but if it just holds banks and is returning 13%, it might be using a covered call strategy, but more likely is returning capital as part of the distributions. You should be able to find this out by reading the fine print in the fund description.

    Canuck2004 – Thanks as always for sharing your wisdom. I always learn something new from you (today it was how to identify an overvalued REIT). I have used your strategy for both my husband and my RSP accounts, and it has worked really well!

  26. Tard Says:

    Kam # 24

    Interest or dividends in TFSA not taxable and no losses can be taken either..

    Tard

  27. Tard Says:

    Triple top is playing …
    I noticed this breakdown last week..did I take the small gains I had ..no..

    http://stockcharts.com/h-sc/ui?s=$TSX&p=D&yr=0&mn=6&dy=0&id=p83918418054&a=280966494&listNum=1

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p11259978291&a=278517948&listNum=1

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