Tech Talk for Wednesday December 27th 2017

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Pre-opening Comments for Wednesday December 27th

U.S. equity index futures were mixed this morning. S&P 500 futures were up 1 point in pre-opening trade.

Charles Schwab (SCHW $51.87) is expected to open higher after SunTrust raised its target price to $63 from $56.

Celgene (CELG $107.00) is expected to open lower after Bernstein downgraded the stock to Market Perform from Outperform.

Apple slipped $0.26 to $170.31 after the company was slapped with eight lawsuits after announcing a slowdown in service for older iPhones.

 

StockTwits Released Yesterday @EquityClock

Newmont Mining $NEM moved above $35.53 setting new intermediate uptrend

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‘Tis the season for Newmont Mining $NEM to move higher to the end of February!

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Editor’s Note: Strength in Newmont helped GDX to move above $22.99.

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Crude Oil ETN $USO moved above $11.18 extending an intermediate uptrend.

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‘Tis the season for crude Oil $USO to move higher to at least the end of April!

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Copper moved above $3.26 per lb. to a 4 year high extending an intermediate uptrend. $JJC

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‘Tis the season for copper and copper stocks to move higher to the end of April! $JJC $COPX

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Encana $ECA $ECA.CA, a TSX 60 stock moved above US$12.96 extending an intermediate uptrend.

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‘Tis the season for Encana $ECA $ECA.CA to move higher to mid-June.

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Don Vialoux on BNN’s Market Call Tonight on December 22nd

Following are links:

https://www.bnn.ca/video/don-vialoux-s-top-picks~1290904 Top Picks

https://www.bnn.ca/video/don-vialoux-s-past-picks~1290858 Past Picks

https://www.bnn.ca/video/don-vialoux-s-market-outlook~1290824 Market Outlook

 

The Bottom Line

Once again, several of the broadly based U.S. equity indices closed at or near all-time closing highs last week. Seasonal influences for most world equity markets turned positive in mid-October and remain positive until the first week in January. Traditional seasonal sensitive sectors (e.g. Consumer Discretionary, Industrials and Financials) are leading the market higher. The Technology sector also recorded a strong rebound again last week. However, medium term technical indicators for the S&P 500 Index, NASDAQ Composite Index, Dow Jones Industrial Average as well as TSX Composite Index remain overbought and short term technical indicators show early signs of peaking. Preferred strategy is to take at least partial profits on strength in seasonally attractive equities and Exchange Traded Funds during the expected “Santa Claus rally” period with the understanding that their next significant intermediate upside move likely will not resurface until next February.

Tax loss selling pressures in the underperforming energy, oil service and precious metal sectors finally peaked on schedule at the end of the second week in December. Weakness has provided a buying opportunity for a seasonal trade in these sectors into spring. Precious metal stocks continued to show technical signs of outperformance last week, an encouraging technical sign when they entered their period of seasonal strength. Ditto for energy and oil service stocks!

 

Economic News This Week

December Consumer Confidence to be released at 10:00 AM EST on Wednesday is expected to slip to 128.0 from 129.5 in November

Initial Jobless Claims to be released at 8:30 AM EST on Wednesday are expected to slip to 240,000 from 245,000 last week.

 

Earnings News This Week

Nil

 

Observations

Trading activity remains well below average this week.

Technical action by individual S&P 500 stocks was bullish, typical during the Santa Claus rally period from mid-December to the first week in January. Number of stocks breaking resistance totaled 61 while number of stocks breaking support totaled 20. Notable on the list of breakouts were Consumer Discretionary and Energy stocks. Notable on the list of breakdowns were Utilities and REIT stocks. Number of stocks trading in an uptrend increased to 314 from 305, number of stocks trading in a neutral trend dropped to 52 from 55 and number of stocks in a downtrend increased to 134 from 140. The Up/Down ratio slipped last week to (3314/134=) 2.34 from 2.18.

Economic and earning news this week is quiet.

Medium term technical indicators (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) remain at intermediate overbought levels

Short term technical indicators (short term momentum, above/below 20 day moving average) for equity indices generally moved higher, but are overbought.

Seasonal influences on a wide variety of equity indices, commodities and sectors began to turn neutral/positive in early October and continue to improve. During the past 20 years, the S&P 500 Index and TSX Composite Index bottomed on average on October 10th. Historically, December has been one of the strongest months and the “Santa Claus rally” from December 15th to January 6th is the strongest three week period in the year for U.S. and Canadian equity indices. The TSX significantly outperforms the S&P 500 and Dow Jones Industrial Average during this period.

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The outlook for S&P earnings and sales remains positive. Fourth quarter earnings are expected to increase 10.9% on a year-over-year basis (up from 10.6% last week) on a 6.7% increase in sales (up from 6.6% last week). First quarter 2018 earnings are expected to increase 11.2% (up from 10.7% last week) on a 6.8% increase in sales. Second quarter 2018 earnings are expected to increase 10.9% (up from 10.3% last week) on a 6.8% increase in revenues (up from 6.7%). Third quarter earnings are expected to increase 12.4% (up from 11.8%) on a 5.8% increase in revenues (up from 5.7%). Fourth quarter 2018 earnings are expected to increase 11.7% (up from 11.1%) on a 4.4% increase in revenues (up from 4.3%). For all of 2018, earnings are expected to increase 11.8% (up from 11.2%) on a 5.6% increase in sales (up from 5.5%).

Short term political uncertainties remain, including North Korean “sabre rattling”, struggling NAFTA negotiations and increased scrutiny by special council on Russia’s influence on the Presidential election

Earnings and revenue prospects beyond the third quarter report season are exceptional for U.S. based companies with international exposure. Consensus for S&P 500 earnings on a year-over-year are expected to exceed 10% in the fourth quarter of 2017 and throughout 2018. Earnings will benefit significantly from weakness in the U.S. Dollar on a year-over-year basis when revenues and earnings from international operations will benefit from higher valued foreign currencies. The U.S. Dollar Index averaged 100 in the fourth quarter of 2016 and 101 in the first quarter of 2017.

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Recent tax loss selling pressures in selected sectors passed their peaked in mid-December and continues to offer a buying opportunity for the traditional Santa Claus rally lasting to the end of the first week in January. The sectors that were under the most downside tax loss selling pressures this year were the energy, oil services and gold/silver sectors. Stocks in these sectors moved strongly higher last week implying that seasonal influences are working once again this year.

Note favourable comments on the U.S. oil services industry (not so much for the Canadian oil services industry) offered on BNN on Friday by the CEO of Precision Drilling:

https://www.bnn.ca/video/special-coverage-precision-drilling-ceo-s-outlook-for-energy-in-2018~1290792

Josef Schachter also offered favourable comments in his December report released on Thursday on “gassy” and oil service stocks. Josef’s services are available at https://www.schachterenergyreport.ca/

 

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for December 22nd 2017

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Green: Increase from previous day

Red: Decrease from previous day

 

Calculating Technical Scores

Technical scores are calculated as follows:

Intermediate Uptrend based on at least 20 trading days: Score 2

          Higher highs and higher lows

Intermediate Neutral trend: Score 0

          Not up or down

Intermediate Downtrend: Score -2

          Lower highs and lower lows

Outperformance relative to the S&P 500 Index: Score: 2

Neutral Performance relative to the S&P 500 Index: 0

Underperformance relative to the S&P 500 Index: Score –2

Above 20 day moving average: Score 1

At 20 day moving average: Score: 0

Below 20 day moving average: –1

Up trending momentum indicators (Daily Stochastics, RSI and MACD): 1

Mixed momentum indicators: 0

Down trending momentum indicators: –1

Technical scores range from -6 to +6. Technical buy signals based on the above guidelines start when a security advances to at least 0.0, but preferably 2.0 or higher. Technical sell/short signals start when a security descends to 0, but preferably -2.0 or lower.

Long positions require maintaining a technical score of -2.0 or higher. Conversely, a short position requires maintaining a technical score of +2.0 or lower.

S&P 500 Index gained 7.53 points (0.28%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators turned down.

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Percent of S&P 500 stocks trading above their 50 day moving average (Also known as the S&P 500 Momentum Barometer) slipped last week to 72.80 from 74.40. Percent remains intermediate overbought and showing early signs of rolling over.

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Percent of S&P 500 stocks trading above their 200 day moving average eased last week to 78.00 from 79.80. Percent remains intermediate overbought and showing early signs of rolling over.

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Bullish Percent Index for S&P 500 stocks increased last week to 78.00 from 77.80 and remained above its 20 day moving average. The Index remains intermediate overbought.

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Bullish Percent Index for TSX stocks increased last week to 66.67 from 65.45 and moved above its 20 day moving average. The Index remains intermediate overbought.

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TSX Composite Index gained 123.29 points (0.77%) last week. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index remains negative (Score: -2). The Index remains above its 20 day moving average (Score: 1). Short term momentum indicators have turned up (Score: 1). Technical score increased last week to 2 from 0.

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Percent of TSX stocks trading above their 50 day moving average (also known as the TSX Momentum Barometer) increased last week to 59.09 from 48.76. Percent remains intermediate overbought.

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Percent of TSX stocks trading above their 200 day moving average increased last week to 61.98 from 57.85. Percent remains intermediate overbought.

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Dow Jones Industrial Average gained 102.32 points (0.42%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. The Average remains above its 20 day moving average. Short term momentum indicators have just rolled over. Technical score slipped last week to 4 from 6.

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Bullish Percent Index for Dow Jones Industrial stocks was unchanged last week at 93.33 and remained above its 20 day moving average. The Index remains intermediate overbought.

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Bullish Percent Index for NASDAQ Composite stocks increased last week to 63.34 from 61.75 and moved back above its 20 day moving average. The Index remains intermediate overbought.

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NASDAQ Composite Index added 23.38 points (0.34%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index increased to Neutral from Negative. The Index remains above its 20 day moving average. Short term momentum indicators have just rolled over. Technical score remained at 2.

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Russell 2000 Index gained 12.51 points (0.82%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.

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Dow Jones Transportation Average increased 281.96 points (0.27%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Average remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 4.

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Australia All Ordinaries Composite Index gained 80.90 points (1.33%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index improved to Neutral from Negative. The Index remained above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.

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Nikkei Average gained 348.54 points (1.55%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains negative. The Average remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from -2.

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Europe iShares gained $0.31 (0.95%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains negative. Units moved back above their 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 2 from -4

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Shanghai Composite Index gained 30.92 points (0.95%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains negative. Units remain below their 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at -2.

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Emerging Markets iShares added $0.33 (0.71%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed on Friday to Neutral from Negative. Units moved back above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -4.

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Currencies

U.S. Dollar Index dropped 0.88 (1.13%) last week. Intermediate trend remains neutral. The Index moved back below its 20 day moving average. Short term momentum indicators are trending down.

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The Euro added 1.09 (0.93%) last week. Intermediate trend remains neutral. The Euro remains above its 20 day moving average. Short term momentum indicators are trending up.

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The Canadian Dollar gained US 0.88 cents (1.13%) last week. Intermediate trend remains down. The Canuck Buck moved back above its 20 day moving average. Short term momentum indicators have turned higher.

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The Japanese Yen dropped 0.53 (0.60%) last week. Intermediate trend remains up. The Yen moved back below its 20 day moving average. Short term momentum indicators are trending down.

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British Pound gained 0.37 (0.28%) last week. Intermediate trend remains up. The Pound slipped back below its 20 day moving average. Short term momentum indicators are trending down.

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Commodities and Related ETFs

Daily Seasonal/Technical Commodities Trends for December 22nd 2017

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Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

 

The CRB Index gained 3.36 points (1.81%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. The Index moved above its 20 day moving average on Friday. Short term momentum indicators have turned up. Technical score improved last week to -2 from -6.

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Gasoline gained 11.5 cents per gallon (6.95%) last week. Intermediate trend remains down. Strength relative to the S&P500 Index changed to Neutral from Negative. Gas moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -6.

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Crude Oil gained $1.14 per barrel (1.99%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. Crude moved back above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 0.

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Natural Gas added $0.05 per MBtu (1.92%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. “Natty” remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -6.

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S&P Energy Index gained 13.25 points (4.54%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned to Positive from Neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 4.

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Philadelphia Oil Services Index gained 13.25 points (9.95%) last week. Intermediate trend changed to up from neutral on a move above 143.53. Strength relative to the S&P 500 Index changed to Positive from Neutral. The Index remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 2.

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Gold added $21.30 per ounce (1.69%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed on Friday to Neutral from Negative. Gold moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -4.

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Silver gained $0.64 per ounce (3.99%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Negative. Silver moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -4.

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AMEX Gold Bug Index gained 8.82 points (4.90%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed last week to Neutral from Negative. The Index moved above its 20 day moving average. Short term momentum indicators are trending higher. Technical score increased last week to 0 from -4.

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Platinum gained $33.60 per ounce (3.78%) last week. Trend remains down. Relative strength remains Negative. PLAT moved above its 20 day MA. Momentum turned up.

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Palladium added $14.15 per ounce (1.39%) last week. Trend remains up. Relative strength remained Positive. PALL remains above its 20 day MA. Momentum remains up.

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Copper gained $0.11 per lb.(3.51%) last week. Intermediate trend changed to neutral from down on a move above 3.176 per lb. Strength relative to the S&P 500 Index changed to Positive from Neutral. Copper remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 0.

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BMO Base Metals ETF gained $0.43 (3.62%) last week. Intermediate trend changed to neutral from down on a move above $11.91. Strength relative to the S&P 500 Index changed to Positive from Neutral. Units remained above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 0.

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Lumber added $18.70 (4.33%) last week. Trend remains up. Relative strength changed to Positive from Negative. Remains above its 20 day MA. Momentum: up.

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Grain added $0.09 (0.37%) last week. Trend remains down. Relative strength remains Negative. Units remained below their 20 day moving average. Momentum remains down.

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Agriculture ETF added $0.26 (0.43%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Negative. Units remain above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 0.

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Interest Rates

Yield on 10 Year Treasuries gained 13 basis points (4.52%) last week. Intermediate trend remains up. Yield remains above its 20 day moving average. Short term momentum indicators are trending up.

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Price of the long term Treasury ETF dropped $3.58 (2.79%) last week. Intermediate trend remains up. Price dropped below its 20 day moving average. Short term momentum indicators are trending down.

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Volatility

The VIX Index added 0.47 (4.98%) last week. Intermediate trend remains down. The Index remains below its 20 day moving average.

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Sectors

Daily Seasonal/Technical Sector Trends for December 22nd 2017

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Green: Increase from previous day

Red: Decrease from previous day

 

StockTwits Released last Friday @EquityClock

Technical action by 5&P 500 stocks to 10:10: Mixed. Breakouts: $LEN $KR. Breakdowns: $MMC $FRT

Editor’s Note: After 10:10 AM EST, breakouts included WHR, DVN and CHRW. Breakdowns included AMT and WY.

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Oil and Gas Exploration SPDRs $XOP moved above $36.86 extending an intermediate uptrend.

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Teck Resources $TECK, another base metal stock moved above US$25.13 extending an intermediate uptrend.

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Canada monthly GDP down 2.8% (NSA) in October, inline with seasonal average change. #CDNecon #CAD $MACRO

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Disclaimer: Seasonality and technical ratings offered in this report and at

www.equityclock.com 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

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9 Responses to “Tech Talk for Wednesday December 27th 2017”

  1. Ron/BC Says:

    The Canadian dollar $CDW has bounced off its tight 1.5 cent channel bottom at 77.41 and is back up to the top of its channel at 79 once again. A breakout that holds above this level would project the same 1.5 cent rally back to 80.50 resistance. The CD$ compared to $WTIC continues to be weak. Seasonal trends for the CD$ are bearish in January.

    http://stockcharts.com/h-sc/ui?s=%24CDW&p=D&yr=2&mn=0&dy=0&id=p66094918907&a=459723983

    http://charts.equityclock.com/canadian-dollar-futures-cd-seasonal-chart

  2. Mick/NV Says:

    fts.to dropped below s1 pivot point support last week and is close to being oversold. looks like there might still be a bit of selling pressure based on the TSI and full stochastics but a change to the blue elder bar from red might suggest a flattening or consolidation occurring at this level. A drop to the s2 pivot point support certainly would be an ideal buying point but sometimes the ideal level doesn’t occur. fts.to is a low beta stock with a 40+ year record of dividend increases, should be a good long term hold for those looking for such stocks.

    http://stockcharts.com/h-sc/ui?s=FTS.TO&p=D&b=5&g=0&id=p26252532428&a=443111650

  3. Mick/NV Says:

    AAPL took a bit of a hit yesterday, gapping down below the main pivot point support and that new resistance is not being broken today, at least for the moment. The gaps on this stock have tended to close nicely, I expect the same to occur this time. The stock is up 49.5% ytd, not a bad run at all, whether that will continue next year depends a lot on what they will bring forward in new products or enhancements to the current ones. Have owned this one for awhile, fortunately, but am also overweight in it so although tempting at this level won’t be adding. A drop to the s1 pivot point if that occurs would be a nice entry point in my opinion, I think the downside is somewhat limited at the moment.

    http://stockcharts.com/h-sc/ui?s=AAPL&p=D&b=5&g=0&id=p22049006420&a=382463347

  4. Ron/BC Says:

    Mick/NV
    It looks like all the Utility type stocks sold off with interest rates rising. I see T.to has outperformed FTS.to since October and outperformed BCE.to consistently for a year now. Have to wonder about the Sector with rates apparently ratcheting up again. But a chart is a chart and T.to has pulled back to the $47 first support ‘area’ as well as FTS.to doing much the same thing.

    http://stockcharts.com/h-sc/ui?s=T.TO&p=D&yr=2&mn=0&dy=0&id=p72376539016&a=502812062

    http://stockcharts.com/h-sc/ui?s=FTS.TO&p=D&yr=2&mn=0&dy=0&id=p81560442268&a=505251651

  5. dutchcanuck Says:

    Last day for tax loss selling.
    Time to pick up some beaten down stocks.

  6. roy Says:

    Hello Ron/BC – Your CSH.UN has been moving steadily upward recently. Almost at a new 52 week hi.

  7. Mick/NV Says:

    Ron/BC

    re : telus and FTS

    I think there may be some ‘window dressing’ by some of the institutional players taking profits to shore up there performance for the year. I suspect they may be shifting into some beaten up stocks going into 2018 year and will probably buy back the utility type stocks later on. Here is a performance chart for telus and fortis, along with an oil stock cnq.to, comparing to the TSX. Both T.to and fts.to have nicely outperformed the index while cnq.to is just slightly ahead with much of its gain coming in the last 2 months. I happen to hold all 3 with Telus being my biggest holding and fts.to in my top 5 holdings, any pullback in these 2 should be good buying opportunities for investment purposes.

    http://stockcharts.com/h-sc/ui?s=T.TO&p=D&st=2017-01-01&id=p29253707604

  8. Neil/Ab Says:

    Nice one year cup and handle developing on Tidewater (twm.t). Don’t own but a break and hold above 1.63 (presently 1.56) could prove interesting. Might be worth watching.

  9. Ron/BC Says:

    Roy
    CSH/un.to is at a double top and needs to clear and hold above this level to breakout and run with $16.14 serving as support on a pullback,not resistance as it presently is.

    http://stockcharts.com/h-sc/ui?s=CSH%2FUN.TO&p=D&yr=3&mn=0&dy=0&id=p72854804758&a=525478408

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