Pre-opening Comments for Friday March 1st
U.S. equity index futures are lower this morning. S&P 500 futures fell 7 points in pre-opening trade. Futures are responding to news that China’s official Purchasing Manager’s Index slipped in February to 50.1 from 50.4 in January. Consensus was 50.5. The Index fell to its lowest level in five months.
Traders are waiting for news about the Sequester following a meeting between President Obama and Congressional leaders at 10:00 AM EST.
Index futures were virtually unchanged following release of economic news at 8:30 AM EST. Consensus for January Personal Income was a drop of 2.4% versus a gain of 2.6% in January. Actual was a drop of 3.6%. Consensus for January Personal Spending was an increase of 0.2% versus a gain of 0.2% in December. Actual was an increase of 0.2%.
Canada’ economy continued to sputter in the fourth quarter. Consensus for annualized real GDP growth in the fourth quarter was 0.6%. Actual was 0.6%. Consensus for December real GDP was a decline of 0.2%. Actual was a decline of 0.2%.
Target added $0.04 to $63.00 after Wells Fargo upgraded the stock from Market Perform to Outperform.
Wendy’s slipped $0.01 to $5.69 after Morgan Stanley downgraded the stock from Overweight to Market Weight.
Visa fell $1.53 to $157.11 after Argus downgraded the stock from Buy to Hold.
AIG eased $0.55 to $37.46 after Evercore downgraded the stock from Overweight to Equal Weight.
Darden Restaurants (DRI $46.27) are expected to open lower after UBS downgraded the stock from Buy to Neutral.
Mixed trading yesterday! A couple of exceptions, Biotech and Canadian Financials! Both closed at an all-time closing high.
Adrienne Toghraie’s “Trader’s Coach” Column
The Philosopher Trader
By Adrienne Toghraie, Trader’s Success Coach
So, you are thinking, what in the world does philosophy have to do with making money in the market? If your answer is, “Nothing,” think again!
Why have a philosophy of life for traders?
Traders cannot trade successfully without having a set of rules by which they come in and out of the markets. Having a philosophy for a trader is like having a larger set of rules, in which his trading rules are merely a subset. Just like a ship, a trader needs a rudder to guide him through untested or turbulent waters. That rudder is a trader’s philosophy of life, and it is essential to providing stability and direction in a very stressful, high-risk
A trader’s philosophy on life will allow him to better handle the losses and wins he experiences during the day, the mistakes he makes, and helps him to put everything into perspective. It can answer the hard and the simple questions that come up for him, making his life easier and creating meaning to the randomness of his work. Having a philosophy is not the same thing as performing a daily meditation or subscribing to a particular religious practice or having a set of goals. A philosophy encompasses all aspects of a trader’s universe, and provides a way of framing the unanswerable questions and thorny issues that arise from moment to moment in a trading day.
A short list
Let me give you an example of what I mean. My own philosophy of life can be boiled down to three statements. They may seem simple on the surface, but they are as profound as I choose to make them. And, more importantly, they answer all questions, resolve all issues, give me guidance when I need it, provide me with my rules of conduct, and prepare me for all contingencies. They also provide a way to resolve and frame issues and
questions that a trader deals with, as well. In order, they are:
1. Life is precious
In a world where all things seem to become increasingly relative, (including values, morality, standards of conduct, agreements, promises, rules, laws, etc.) the one constant in our lives is that life is precious and that every moment of it can either mean something or be squandered. Thus, whenever I am faced with a decision, I apply this principle and act accordingly. I take that trip, call that friend, make that decision, and embrace as much joy from life as I can. I see the sand falling more and more rapidly from the top of the hourglass.
For you as a trader, it means that you must look at your personal life as well. Your children are growing up, and you need to spend time with them. Your health has its own hourglass and cannot be squandered, so handle stress and take good care of your physical and emotional health. It means that to waste that precious time on mediocrity in any form is just that: a waste. So, if you are going to read and learn, then read books by and learn from great minds; if you are going to watch television and movies, spend time with wonderful, uplifting artists; if you are going to socialize, do so with people you love and not with people you have nothing in common with and who do not care about you. Make your mark now. The future may not be there. Here’s the usual question to
which I apply this principle: Should I do that? The answer is, life is precious. And that understanding always provides me the impetus to act (or not) accordingly.
2. We are all connected
Life may be short, but we are in it with everyone else. We are all connected. What you do affects others. The decisions you make and the actions you take do not end with yourself. If Columbia University’s physicist, Dr. Brian Greene, is correct and the String Theory is real, then this philosophical principle that we are all connected is more than a cloyingly annoying statement on a Hallmark card, and we truly are, actually, connected to each other. This notion provides a balance to rule number one. If I decide that life is precious, and I should utilize each moment to its fullest, I must also do so in a way that takes into account the effect my decisions and actions have on others. For traders, this adds an ethical component to their lives. Like rule number one, it also strengthens the relationships in his life that provide him with support and sustainability. For example, it is difficult to conduct your business in a way that detracts from the happiness and wellbeing of your family members if you stay conscious of the fact that you are actually connected to them.
3. People are unique
This simple philosophy actually distills for me a lifetime of observing the most remarkable, irrational, saintly/evil and random behavior of humanity. I watch with a sense of calm as others ponder in anger and frustration the questions of “why?” and “how could they do that?” Why did that driver in the far left lane just exit off the highway in front of me at 80 miles an hour across four lanes of traffic? Madness of that sort no longer bothers me because I simply remind myself that people are unique. This philosophy allows me to expect the best, the worst, the most irrational, and the most unanticipated from those around me. For traders, it is the perfect insulation from the unpredictability and irrationality of their business associates, family, and friends, as well as the market.
Your philosophy to-do list
So, now that you have my own set of philosophical principles, what about your own? Here is a to a to-do list to help you put together your own guiding principles:
1. Ask yourself – What do I believe about life?
2. Ask yourself – What are my own guiding principles? Do not worry if the answer does not come immediately. It will. Just keep asking and over time, the answer will come to you.
3. Write down your thoughts.
4. Distill them into a set of principles.
5. Write down a set of actions that will support your principles.
6. Put them on a card that you carry with you and on a note that you can see from your workplace.
7. Set them to memory by reading them every day.
8. Let them guide your decisions and actions.
9. Now, enjoy the peace they will give you and the support they will offer your trading.
Adrienne’s Free Webinars
Adrienne presents free webinars on the psychology of trading
Updates on Sector Seasonal Trades
Seasonal trades optimally have a technical score of 3 based on (1) uptrend, (2) trading above its 20 day moving average and (3) outperforming the market (S&P 500 for U.S. holdings, TSX for Canadian holdings). Scores moving lower than 3 are warnings signs. A score of 0-0.5 is a sell signal.
Last week, the following seasonal trades fell to a technical score of 0.5 or 0.0 and therefore were sell candidates: Forest Products (WOOD), Materials SPDRs (XLB), Copper (JJC), Platinum (PPLT), TSX Energy (XEG), Oil Services (OIH) and Metals & Mining SPDRs (XME). Accordingly, they have not been updated in this report.
The following seasonal trades have a technical score of 1.0 or higher and currently are in their period of seasonal strength. Their retention is recommended.
Technical score for Industrial SPDRs increased from 2.0 to 3.0 when units moved above their 20 day moving average. Seasonal influences are positive until early May.
Technical score for Consumer Discretionary SPDRs increased from 1.0 to 2.5 when units recovered above their 20 day moving average and strength relative to the S&P 500 changed from neutral to positive. Seasonal influences are positive until mid-April
Technical score for Retail SPDRs changed from 2.0 to 1.5 when strength relative to the S&P 500 Index changed from positive to neutral. Seasonal influences are positive until mid-April
Technical score for the Semiconductor ETF increased last week from 1.5 to 2.0 when units moved above their 20 day moving average. Favourable seasonal influences end next week.
Technical score for Palladium was unchanged at 1.0. Seasonal influences are positive until mid-April
Technical score for U.S. Oil and Gas Exploration units remains at 1.0. Seasonal influences are favourable until mid-April.
Technical score on Energy SPDRs remains at 1.0. Seasonal influences are positive until the end of April.
Technical score for gasoline changed from 3.0 to 1.0 after units fell below their 20 day moving average and after strength relative to the S&P 500 Index changed from positive to negative.
Technical score for iShares on the TSX Financial Index is 3.0: Upward trend, trades above its 20 day moving average and strength relative to the TSX Composite is positive. Seasonal influences are positive until mid-April.
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. Notice that most of the seasonality charts have been updated recently.
To login, simply go to http://www.equityclock.com/charts/
Following is an example:
The Boeing Company (NYSE:BA) 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 28th 2013