Pre-opening Comments for Wednesday February 27th
U.S. equity index futures are higher this morning. S&P 500 futures are up 2 points in pre-opening trade. Traders are waiting for Federal Reserve chairman Ben Bernanke’s second day of testimony on monetary policy.
Index futures were virtually unchanged following release of January Durable Goods Orders report. Consensus was a decline of 4.0% versus a gain of 4.3% in December. Actual was a decline of 5.2%. Ex transportation, consensus was a gain of 0.2% versus an increase of 1.0% in December. Actual was a gain of 1.9%.
Target fell $1.55 to $62.40 despite reporting higher than expected fourth quarter earnings.
Google gained $5.57 to $795.70 after Bank of America/Merrill upgraded the stock from Neutral to Buy. Target price was raised from $790 to $920.
Target Corp. (NYSE:TGT) – $62.40 fell 2.6% in pre-opening trade despite reporting higher than consensus fourth quarter earnings. The stock has a positive technical profile. Intermediate trend is up. The stock recently has tested its all-time high at $65.05. The stock remains above its 20, 50 and 200 day moving averages. Strength relative to the S&P 500 Index has been positive since the beginning of February. Short term momentum indicators are overbought. Seasonal influences are positive until the end of May. Preferred strategy is to accumulate the stock on weakness closer to its 50 day moving average at $60.96.
Target Corporation (NYSE:TGT) Seasonal Chart
An update on Canada’s Banks
Bank of Montreal started the fiscal first quarter earnings report period ending January on a positive note. Consensus was $1.46 versus $1.42 per share last year. Actual was $1.52, a gain of 7.0%. BMO also surprised with a dividend increase, the second increase in the past six months. Stock market response to the report was encouraging. The stock continues to outperform the TSX Composite Index and once again is testing its all-time high at $63.98.
Fiscal first quarter earnings reports by Canada’s remaining “Big Six” are scheduled to be released during the next week. Four banks are scheduled to release results on Thursday: Commerce Bank, National Bank, Royal Bank and Toronto Dominion. Scotia is scheduled to release results next Tuesday.
Analysts are not expected much. Consensus estimates show an average gain in the quarter on a year-over-year basis is 5.0%. Analysts also are predicting dividend increases by at least two of the remaining banks.
Seasonal influences for the TSX Financial Services Index turns positive at this time of year until mid-April. Following is a nine year seasonality study on the TSX Financial Services Index:
S&P/TSX Capped Financial Index Seasonal Chart
On the charts, the TSX Financial Services Index continues to lead the TSX Composite Index.
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Dow Jones Transportation Average Index (^DJT) 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 February 26th 2013