Tech Talk for Monday September 30th 2019

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Next Tech Talk Report

There will be no reports during first week of October.   Come back on Monday, October 7th for the next report release.

The Bottom Line

World equity markets moved lower last week with elevated volatility. Equity markets have a history of elevated volatility at this time of year with a flat/downward bias from mid-July to mid-October. The weakest period for North American equity markets is from mid-September to mid-October while other developed equity markets in the world tend reach a seasonal low in the first half of October. Supplemental concerns this year include an earnings recession by major U.S. companies until the fourth quarter this year (particularly companies with extensive international operations), growing efforts by the Democrats to impeach Donald Trump, growing Middle East tensions and unsettled trade negotiations between the U.S. and China.

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Observations

Seasonal influences on U.S. equity markets tend to turn negative from the second half of September to the second half of October. Seasonal influences for equity markets in other developed nations tend to start bottoming in the first half of October.

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Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) moved lower last week. They are overbought and showing signs of rolling over. See charts near the end of this report

Medium term technical indicators for Canadian equity markets also moved lower last week. They also are overbought and showing signs of rolling over. See charts near the end of this report.

Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) moved lower last week.

Short term technical indicators for Canadian markets and sectors also moved lower last week

Third quarter corporate reports continue to trickle in this week: Seven S&P 500 companies are scheduled to report.

‘Tis the season between now and the first week in October when major companies “confess” if they were unable to achieve previous guidelines.

Analysts continue to reduce earnings and revenue estimates slightly for S&P 500 companies. According to FactSet, third quarter earnings on a year-over-year basis are expected to drop by 3.7% and revenues are expected to increase 2.8%. Eighty two companies have issued negative third quarter guidance and 31 companies have issued positive third quarter guidance. Fourth quarter earnings are expected to increase 2.9% (down from 3.0% last week) and fourth quarter revenues are expected to increase 3.6%. For all of 2019, earnings are expected to increase 1.3% and revenues are expected to increase 4.1%. First quarter 2020 earnings are expected to increase 7.8% (down from 7.9%) and revenues are expected to increase 5.4 %. Second quarter 2020 earnings are expected to increase 9.0% and revenues are expected to increase 6.3%. Earnings for all of 2020 are expected to increase 10.6% and revenues are expected to increase 5.6%.

 

Economic News This Week

OPEC meeting tentatively is scheduled on Monday.

September Chicago PMI to be released at 9:45 AM EDT on Monday is expected to slip to 49.9 from 50.4 in August.

July Canadian GDP to be released at 8:30 AM EDT on Tuesday is expected to increase 0.1% versus a gain of 0.2% in June.

August Construction Spending to be released at 10:00 AM EDT on Tuesday is expected to increase 0.4% versus a gain of 0.1% in July.

September Manufacturing ISM to be released at 10:00 AM EDT on Tuesday is expected to increase to 50.0 from 49.1 in August.

September ADP Private Employment Report to be released at 8:15 AM EDT on Wednesday is expected to slip to 140,000 from 195,000 in August.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 215,000 from 213,000 last week.

August Factory Orders to be released at 10:00 AM EDT on Thursday are expected to fall 0.5% versus a gain of 1.4% in July.

September Services ISM to be released at 10:00 AM EDT on Thursday is expected to drop to 55.0 from 56.4 in August

September Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to increase to 140,000 from 130,000 in August. September Unemployment Rate is expected to remain unchanged from August at 3.7%. September Hourly Earnings are expected to increase 0.3% versus a gain of 0.4% in August.

U.S. August Trade Deficit to be released at 8:30 AM EDT on Friday is expected to increase to $54.6 billion from $54.0 billion in July.

Canadian August Canadian Merchandise Trade to be released at 8:30 AM EDT on Friday is expected to improve to a deficit of $1.0 billion from a deficit of $1.12 billion in July.

 

Earnings News This Week

earnings sept 30

 

Trader’s Corner

Note changes in Seasonal ratings

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for September 27th 2019

spx sept 30

Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for September 27th 2019

crb sept 30

Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for September 27th 2019

xlk sept 30

Green: Increase from previous day

Red: Decrease from previous day

Technical Scores

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

Changes Last Week

changes sept 30

 

StockTwits released on Friday @EquityClock

Silver ETN $SLV moved below $16.28 completing a short term double top pattern. Gold and silver equities have responded by breaking short term support levels: $PAAS $ELD.CA $YRI.CA

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Facebook $FB, a NASDAQ 100 stock moved below $176.66 setting an intermediate downtrend.

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Restaurant Brands International $QSR.CA, a TSX 60 stock moved below $92.80 completing a Head & Shoulders pattern.

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S&P 500 Momentum Barometers

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Percent of S&P 500 stocks trading below their 50 day moving average dropped 8.27 to 63.73 last week. It remains intermediate overbought and has started to trend down.

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Bullish Percent Index for S&P 500 stocks dropped 4.00 to 64.80 last week. It remains intermediate overbought and has started to roll over.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average dropped 14.40 to 58.01 last week. Percent changed to intermediate neutral from intermediate overbought on a fall below 60.00 and has started to trend down.

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Bullish Percent Index for TSX stocks slipped 2.10 to 62.34 last week. Percent remains intermediate overbought and has started to roll over.

 

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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55 Responses to “Tech Talk for Monday September 30th 2019”

  1. Ron/BC Says:

    Bernie

    Thanks for the Fund & ETF info. Over the next few weeks I’ll see what conclusions I can come to with plunking some cash down on them. The MAW 120 Global Equity Fund seems like a consistently high performing Fund but with more balance than the MAW 108 U.S. Equity Fund. And it’s 1/2 the price of MAW108. A combination of those two with some MAW 130 Global Balanced Fund looks like a good combination. I don’t mind higher risk “IF” I can exit quickly.
    Just like the guy who walked into a blacksmith’s shop and picked up a horseshoe that had just been heated. He immediately tossed it and the Blacksmith said “Hot hey?”. The guy just said no, it just doesn’t take me long to look at a horseshoe. That’s how I deal with mistakes.

    Paula
    Thanks for your input as well.

  2. Bernie Says:

    Ron/BC,

    You’re welcome Ron. Just want to clarify your connotations of “balance” and “price”.

    When “balanced” is used in context with a fund it means the holdings are a mix of equities and fixed income. When you say MAW120 has more balance than MAW108 are you referring to global presence because the former covers more countries around the globe while the latter covers only one? Both are equity funds with no fixed income content.

    With regard to your reference to MAW120 being half the “price” of MAW108 you must be referring to the unit prices. As is the case with stocks and ETFs, mutual fund unit prices are not a measure of value. MAW120’s unit price is certainly half the unit price of MAW108 but it wouldn’t be valued the same way based on price. There are several ways to value a security, the most common measure used is the P/E ratio. I did some digging to find the weighted average P/E ratio of both these funds holdings. I was able to find them at ycharts. MAW120 shows a P/E of 21.53, while MAW108’s P/E is 25.34. This values MAW120 cheaper by 15%.

    Mutual fund prices are only updated once daily so if you’re wanting the option to exit intraday I’d suggest ETFs or stocks over mutual funds.

  3. Ron/BC Says:

    Bernie
    Thanks for the clarification. And I did mean more balance using Global stocks rather than just U.S. stocks. What haunts me is most of the world is having serious economic problems with Negative interest rates and questionable economics while the U.S. is drawing money from all over the world and as usual has the strongest currency in the world. That would suggest to me to stick with them in most ways. I can have both currencies in my RIF but just have U.S.$ there now for a long time. Canada will rarely have a stronger currency as that gives Canada an advantage in trading with the U.S. that is a big help to Canada.
    I was also wondering what you thought about holding XSP.to as it tracks the $SPX closely with lots of volume and very chartable and followed. I don’t know if its dividend is good or bad and thought you may have a good assessment of that ETF comparably.

  4. Ron/BC Says:

    Bernie
    Here is a chart of XSP.to with the info on it.

    https://stockcharts.com/h-sc/ui?s=XSP.TO&p=D&yr=0&mn=6&dy=0&id=p47363582440&a=689889356

  5. Bernie Says:

    Ron/BC,

    XSP is an iShares S&P500 index ETF hedged to $CAD so its basically the same thing as the U.S. based SPY. Vanguard & BMO have very similar ETFs in VSP & ZSP. Because they all have the same holdings and currency representation you’re probably better off going with the lowest cost ETF. SPY, VSP & ZSP have 0.09% MERs, XSP has a 0.11% MER. There are also unhedged versions available. I’m not really into broad index ETFs so I’m not the one who should be giving you suggestions on them. I prefer to focus on dividend growth stocks or dividend ETFs. I have heard that if you expect the U.S. to outperform Canada, as they have been for quite some time, then you’d probably be better off with unhedged versions.

    Hopefully someone more versed in investing/trading the U.S. S&P 500 Index can chime in with more specific info and suggestions for you.

    My wife is taking me out for dinner tonight to celebrate my birthday #69. Its crazy how time accelerates with age. I’d swear I retired just 2 years ago but its been 8. SMH

  6. Ron/BC Says:

    Bernie

    Well Happy Birthday! I have one coming up next month and just don’t believe that age. I like to think I’m still a baby duck. And yes,time does shoot by. In my next life I’ll spend it more wisely. Thanks for the info.

  7. Paula Says:

    Bernie,
    Thanks for your detailed and concise explanations/clarification of the mutual funds and ETFs. As well your generous sharing of your time. I have saved your posts for future reference.
    And Happy Birthday! Wishing you many more…

    Ron, it will really be something if you pursue “buy and hold” for any length of time. Thanks for letting us watch the process of going from extreme risk adverse trader to investor.

    I hope the comments on Tech Talk remains open even when Don is taking some time off.

  8. Bobj Says:

    Bernie,
    best wishes to your special day, take good care, bob.

  9. Ron/BC Says:

    Paula

    Well the $100K 3 year GIC from Coast Capital Credit Union paying 4% has forced me to become an “Investor” whether I like it or not. I’ve actually gone down there and inquired how I can get my cash back sooner. It can be done but could be costly. So I am getting used to being an investor for the last 18 months. The GIC will be free in January 2021. That is still a long,long time. And the interest more than pays my strata fees on my condo and the majority of it is TFSA money which is not taxable. So if I can do that I should be able to invest some extra money that can just sit there and grow. I do prefer an ETF that I can chart and trade “occasionally” so would like to find the best ETFs that track the $SPX. That would make sense to me. If you or anyone else knows the best ETFs for this please post them.

  10. Paula Says:

    Ron/BC,
    I guess you are an investor after all when you are “locked in” to GICs. You have it figured out that your strata fees are taken care of that way so you don’t need to worry about not being to get out of the GICs without a penalty. What else would you be doing with that money that would serve a better purpose?

    As far as ETFs that track the $SPX, I think you have to look no further than Bernie’s post #5 above. He basically said it all. Of course, with your USD, you can always buy SPY, probably one of the most liquid and cheapest ETFs out there. You have posted charts of SPY numerous times and I appreciate the updates. And if you held SPY or any other of those ETFs described by Bernie, you would be getting a dividend. (I decided awhile back to use ZSP.TO, when looking for $SPX exposure, mostly because of the low MER but don’t currently own it).

  11. Bernie Says:

    Thank you kindly for the birthday wishes! I thoroughly enjoyed our outing and dinner this evening, perhaps too much, I eat way too much lol.

  12. Bernie Says:

    Ron/BC,

    I agree with Paula. If you want to own the S&P500 and have your RRIF funds in $USD already why not just buy SPY. If the S&P500 does fall beneath your comfort level you could remain fully invested by simply moving your funds over to TLT. Switching between these two has worked for a lot of folks over the years. The strategy has worked well due to the inverse relationship between the 2 ETFs. Many investor/traders pile into the S&P500 in good times and into U.S. long bonds when equity markets tank.

  13. Bernie Says:

    Ron/BC,

    I agree with Paula. If you want to own the S&P500 and have your RRIF funds in $USD already why not just buy SPY. If the S&P500 does fall beneath your comfort level you could remain fully invested by simply moving your funds over to TLT. Switching between these two has worked for a lot of folks over the years. The strategy has worked well due to the inverse relationship between the 2 ETFs. Many investor/traders pile into the S&P500 in good times and into U.S. long bonds when equity markets tank. I’d suggest doing some back testing first.

  14. Ron/BC Says:

    Bernie

    Glad you had a nice outing. Just don’t have anymore birthdays,lol. I don’t plan to.

    Here is the SPY ETF with XSP.to & ZSP.to along with the NYSE listed ETFs IVV and IVW (Growth) ETF all overlaid the SPY. The 2 $TSX listed ETFs are a fraction of the price but all track the SPY closely. I one issue I have is my RIF money is trapped of course unless I wish to give the Feds a chunk of it in tax. And it’s in U.S.$ but all other money is in CD$. So your SPY/TLT suggestion is a good one I think for the RIF. What to do with CD$ that is not trapped in the GIC for another 15 months is always the question. I guess the XSP.to and ZSP.to is a good bet at the right time and if I wanted out just exit and stand aside. Can’t think of any ETFs on the $TSX like TLT. I do think a strategy like this is best for me as I’m just not familiar with all the ins and outs of Dividend ETFs and their stocks strategies. I like the SPY type ETFs as its such a pure play on the broad market and they also have dividends etc. And money from all over the world is flowing into the U.S. markets. Plus it’s easy to exit and enter with lots of volume. More my comfort zone.

    https://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=1&mn=6&dy=0&id=p00290679580&a=691023604

    https://stockcharts.com/h-sc/ui?s=TLT&p=D&yr=1&mn=0&dy=0&id=p15809089729&a=673066196

  15. Ana Says:

    Happy Birthday, Bernie!

    Enjoy the celebrations. You are correct, time does seem to go by so quickly. Why is that so?

  16. Ana Says:

    $VIX Futures

    There is an inverse head and shoulder on the charts for $VIX.

  17. Ana Says:

    So everyone invested in the market, does 4% return on your equity look good today?

    This is really not the time, to buy anything.

  18. Ron/BC Says:

    The $SPX is testing 2940 once again. In fact this is where it was one year ago this time. So much for the raging bull market. If I had a gun to my head and had to make a trade I’d short the crap out of this market.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=1&mn=6&dy=0&id=p73307694710&a=679537707

  19. Ana Says:

    $SPX Futures

    Macd has crossed on the daily, weekly and monthly chart.

    Will it break the channel?

    https://invst.ly/fsxih

  20. bruce Says:

    tnx for your comments Ana…..keep them coming……..

  21. Florence Says:

    Happy Birthday, Bernie!
    Thank you for all your generous information. I have been following it closely.

  22. Bernie Says:

    Anna & Florence,

    Thank you both very kindly for the Birthday greetings.

  23. Bernie Says:

    Ron/BC et al,

    There is an ETF on the $TSX like TLT: “BMO Long-Term US Treasury Bond Index ETF (ZTL). Its also available in $USD (ZTL.U).

    Its good that you like the SPY/TLT approach for your RRIF but I wouldn’t suggest holding any U.S. dividend paying stocks or ETFs in your TFSA unless you’re ok with 15% non-recoverable withholding tax grabs on your dividends by Uncle Sam.
    I know you aren’t familiar/comfortable with dividend strategies or holding a lot of positions so why not go instead with an 80%fixed income/20% equity content two Canadian ETF mix in your TFSA. I did some back testing this morning on portfoliovizulizer.com with a few different scenarios. I really like this one (below) for safe 6% annualized returns (including tax free dividends) with very low volatility and minimal drawdowns:
    An 80% iShares Core Canadian Universe Bond ETF (XBB)/20% Firm Capital Mortgage Investment Corp (FC) mix with one annual rebalance would have returned an annualized TR of 6.08% for the Jan 2004 to current period with an extremely low standard deviation of 3.78% (volatility). The best year was 2004 with a 12.84% return and worst year was 2013 with a -1.67% return. There were no other negative annual returns. Max drawdown was -5.03% in May to Aug 2013 with recovery by May 2014. Both XBB and FC pay monthly distributions, The yield on the 80/20 mix is currently 3.55%. All results are based on total return (price+dividend). FC has paid the same distribution since 1999, XBB’s distributions vary due to its Canadian bond index content.

    Another decent and easy to manage option would be to buy and passively monitor Mawer Balanced Fund (MAW104). It would be good to hold in your TFSA. If you need income, however, you will need to sell some units because the yield is extremely low, ie; currently 1.16%. Its run very well and has performed exceptionally well for a balanced fund. The lifetime annualized CAGR is 8.37% dating back to inception in 1988. There have only been 3 negative annual TRs, -2.25% in 1994, -16.11% in 2008 and -0.30% in 2018. The largest drawdown was -22.5% from Sep 2008 to Mar 2009.

  24. Ron/BC Says:

    Bernie

    Thanks for the feedback. Interesting stuff.
    I like the simplicity of MAW 120 as well as the high return of over 11%-12% and don’t mind risk so something like that looks good. That might be good for my TFSA money as I can put in another $5K soon along with accumulated payments from my GIC TFSA that I’ve saved. I don’t know if the TFSA account is the best account to hold MAW120 or the others. FC.to has a very steady uptrend intact but not a lot of daily volume. Not sure of the relationship with XBB.to. The XSP.to tracks the $SPX the best so that is one that I’m thinking about presently for CD$ as well. Would like to see a pullback first though. I believe the SPY & TLT for U.S.$ investment can be purchased as a spread but would need to check with Questrade. P.S. Ana’s name is spelled with one A unlike the Anna Hummingbirds on the West Coast.

    https://stockcharts.com/h-sc/ui?s=FC.TO&p=D&yr=2&mn=0&dy=0&id=p96585464492&a=691104566

    https://stockcharts.com/h-sc/ui?s=SPY%3ATLT&p=D&yr=10&mn=0&dy=0&id=p41010224029&a=691113015

  25. Bernie Says:

    Re: #22

    Sorry for the typo. I know your name is spelled Ana. My Bad

  26. Bernie Says:

    Ron/BC,

    Re: #24 withholding taxes on U.S. ETFs
    Mutual funds aren’t subject to withholding taxes in TFSAs but ETFs may be. I haven’t held any U.S. dividend stocks or ETFs there for that reason. I can’t say for sure but I think XSP might be subject to them even though its domiciled in Canada. Hopefully someone on here with experience in this can enlighten us on this subject.

  27. Bernie Says:

    Ron/BC,

    Re: #24
    MAW120 will give you greater returns long term but it’s at the expense of greater volatility and risk. If you hold MAW104 in addition to MAW120 your returns won’t be quite as high but your volatility will dampen as will your risk. I knew you would comment on FC’s volume. It shouldn’t be a concern with in buy and hold strategy when its only a 20% position as opposed to XBB’s 80%. Back testing shows these two really work well together long term for an ultra low risk mix as I mentioned. Just lower returns.

    As Ana mentioned its not the best time to enter the market. Everyone should pay DD on their entry levels, especially long term. Not sure what she means by “does 4% return on your equity look good today?”.

  28. Ron/BC Says:

    Bernie

    I’ll phone Questrade tomorrow and ask about withholding taxes on $TSX listed ETFs or any other ETFs. After having to pay thousands of dollars on B.C.’s unique Property Transfer Tax and Real Estate commission fees and Lawyer fees etc,etc,etc, I’m in no mood to pay any other fees or taxes.

  29. Bernie Says:

    Ron/BC et al,

    Re: #28

    Good idea. I’ve given this one a lot of thought of late and I’m now thinking the dividends you receive in Canadian based U.S. funds (both mutuals & ETFs) have already had the withholding taxes removed at source by the U.S. before being transferred to Canada. Case in point: look at the current yields for XSP.TO (1.49%) and SPY (1.87%). I believe the difference is in withholding taxes and forex fees. I hope Questrade is able to clarify things for you (and us).

    Another point regarding dividend payments for the securities we discussed. Not sure if you care but others here might: XSP.TO pays biannual dividends (early Jan & late Jun). The others ZSP.TO, VSP.TO & SPY pay quarterly. Personally, I don’t care for biannual or annual dividends because it makes budgeting more difficult. Per the other securities we’ve discussed: XBB.TO, FC.TO, MAW104 & MAW130 pay monthly. MAW120 & MAW108 pays annually.

  30. Bernie Says:

    Another interesting seasonal investing strategy:

    “Announcing the NEW Alpha International Power Index Strategy”

    http://www.alphaim.net/power_newsletter.html

  31. Ron/BC Says:

    Bernie

    I called Questrade regarding U.S. withholding taxes and they said the U.S. and Canada do have an agreement in place so investments within an RRSP or RRIF or any other Retirement account is EXEMPT. But investments within a TFSA or RESP and other investment accounts Canadians would have to pay a 15% withholding tax on dividends. Other countries would pay a 30% withholding tax. I asked him if you could ever get the paid withholding tax back and he said you’d have to talk to your accountant about that and likely the U.S. office that collects the tax.

  32. Ron/BC Says:

    Bernie

    That Article of Alpha’s Seasonal Investing was interesting. It seems to match up with my thoughts on choosing MAW 120 as a first choice. I guess for the weaker market months there are many Bond funds to choose from. One could even switch out of MAW 120 Global Equities and get into MAW 100 CD Bond Fund or MAW 140 Global Bond Fund. Or compromise & buy the Maw 104 Balanced Fund or MAW 130 Global Bond Fund in those weaker months to play both sides as with those two you have an increase in the Bond content with them. Then you wouldn’t risk missing market rallies and still have a Bond content.

  33. Ron/BC Says:

    Bernie

    #32 should read …”Or compromise & buy the MAW 104 Balanced Fund or MAW 130 Global “BALANCED” Fund in the weaker months to play both sides but with a more conservative Fund having a 32% Bond content.

    I phoned Mawer Funds and they only have Canadian dollar funds and no U.S.$ Funds.

  34. Bernie Says:

    Ron/BC,

    Re:#31
    Questrade’s response was as I expected as I have owned U.S. stocks for many years, just not ETFs in my TFSA or N/R account or U.S. stocks in my TFSA. In my N/R account the U.S. dividend amount and deducted 15% withholding tax were clearly shown in the transactions page. I’m sure it would have too had I held in my TFSA. I’m still not 100% clear when exactly the withholding taxes are deducted with ETFs but strongly suspect its done in the U.S. before the dividends are transferred to the fund company. Did they touch upon this? I know for certain those stock withholding taxes are only recoverable with N/R accounts, not with TFSAs. I doubt they’re recoverable at all with ETFs or mutual funds. I’m pretty sure the Canadian Couch Potato site would have more info on this subject either in articles or comments. They focus on index investing. Here’s the link if you’re interested: https://canadiancouchpotato.com/

    Re: #32 trading mutual funds like Mawer
    If you do decide to trade/invest Mawer funds within Questrade I suggest you become familiar with their buy/sell rules, or restrictions if there are any. BMO InvestorLine charges no commissions on mutual fund purchases or sales if held a minimum of 3 months. There is a penalty if selling within the 3 months which can make trading expensive. I don’t know the mutual fund rules at Questrade. They should be spelled out on their site or you could call them again for clarity.

    I hope we’re not hijacking the blog with all our comments. Comments from others have been rather scarce of late.

  35. Bernie Says:

    Ron/BC,

    Re: #33 trading into MAW104 and/or MAW130 from MAW120
    Before you act on doing this keep in mind the balanced funds may carry 32% bonds but they still carry close to 70% equities so they will still fall in down markets, just not as much. I suggest doing a little comparative back testing on how these funds have behaved in the past. The interactive chart function in Morningstar is a great tool for this. It available via the “Growth of 10,000” in the middle of the Performance page. I often use this feature. https://www.morningstar.ca/ca/report/fund/performance.aspx?t=0P0000714D&FundServCode=MAW104@7&lang=en-CA

  36. bruce Says:

    nice call on the spx Ana……nailed it…..

  37. Ana Says:

    Bernie,

    No worries on the spelling, I am not easily offended.

    I was referring to 4% on Ron/BC’s message to Paula:

    “Ron/BC Says:
    September 30th, 2019 at 10:13 pm
    Paula
    Well the $100K 3 year GIC from Coast Capital Credit Union paying 4% has forced me to become an “Investor” whether I like it or not.”

  38. Larry/ON Says:

    MU – Micron – This is perhaps the most sensitive stock to US-China trade negotiations and prospects for economic growth – Jim Cramer points out that the direction of MU can give an idea of where the market is headed and right now MU is bottoming nicely.

    SP500 – Following a pattern of higher lows and 2875 has a good chance of holding up as the Oct low with a rising 200day MA a short distance below. Of course we don’t know what Trump has in store for us.

  39. Ron/BC Says:

    Bernie

    Questrade said for more detail on Mawer Funds rules and when dividend tax withdrawals are made it’s best to call Mawer Funds. Some rules are specific to a brokerage company. As far as Questrade goes they charge $9.95 to buy a fund and the same again to sell and you can do this any time you wish. I like that as I don’t like rules that restrict when I can do something. I didn’t ask if there is a penalty on early selling or not but he didn’t say anything about a penalty. Just a $9.95 fee going in and the same again going out. And you can’t exit at intraday prices, just the closing price that day.

  40. Ron/BC Says:

    Bernie

    I called Questrade again and they said the withholding tax on dividends is removed on the day the dividend is paid. So if today the dividend was paid and it was $1.00 you would get 85 cents rather than the one dollar. I also asked if there was a penalty for selling “too soon” according to Mawer and he said they can charge 2% if the fund is sold within 90 days. I don’t know if the word ‘can’ means ‘will’ though but I suspect so. And Questrade does have charts of the Mawer funds but are not as interactive as Barchart or other sites. I can see why so many investors just use ETFs that can be bought and sold whenever with crystal clear charts and coverage, plus there are so many combination ETFs to choose from. I see the October plunge continues year after year. Might be a good time to pick a bottom in October according to Seasonal Investing. Time to pay attention!

  41. bruce Says:

    the aaii sentiment survey showed a significant change this week……..the bulls have dropped to 21.4%…historical average is 38%…….the bears have risen to 39.4% versus historical average of 30.5%….hmmmmm……

  42. Larry/ON Says:

    There’s Your Bottom – A new low and then a big snap back to much higher levels. Odds are that’s it. MU doing very well today and SHOP really looks like it has broken its’ downtrend.

  43. Bernie Says:

    Ron/BC,

    Its good to see you now have more clarity on U.S. dividend payments and buying/selling Mawer funds via Questrade. Thanks for sharing the info! I think I’ll stock with InvestorLine. Can’t buy ETFs commission-free but mutual funds are including setting up systematic withdrawals. I don’t mind waiting 3 months to sell after my initial purchase either because I don’t trade mutual funds. You prefer ETFs so Questrade works well for you. Good luck in finding good entry levels!

  44. Ana Says:

    #42. Larry/ON

    Have a look at the potential patterns here.

  45. bruce Says:

    ana
    you left out the patterns…..

  46. Ron/BC Says:

    Bernie

    It’s not that I’d likely sell a fund position within 3 months as the idea is to invest not trade. But if the fund or broad market came unglued and I felt I’d be better off exiting and standing aside until the dust settled I’d be charged 2% of the fund value if I sold within that 3 months. I can see them discouraging in and out trading but that is a situation that would concern me. Add to that there isn’t the greatest charts for funds unlike stocks and ETFs so there are a couple of factors that are concerning. But if things line up well and look encouraging the MAW120 and a couple of other MAWER Funds do look like they’d be a good investment to get into. It would be nice not to over analyze a position and just get long and hang on as long as the overall trend remained positive. So we’ll see how things pan out over the next while. Historically the broad market bottoms in October and that Seasonal Link you posted could make for a good setup over the next few weeks.

  47. Bernie Says:

    You don’t necessarily have to sit on the sideline if you exit the broad equity market. In down markets a good portion of the money flows over into U.S. long bonds.

    There’s also a history of strong seasonality in U.S. midcaps from Nov to May. One of these days I’m going to back test Mawer U.S. Equity Fund’s seasonality to see how it compares to the U.S. midcap index. The drawback to the comparison is the difference in currencies. The back test wouldn’t be 100% accurate but it would still be interesting nonetheless.

  48. Bernie Says:

    Ron/BC,

    Re: #47
    Sorry forgot to include your username.

  49. Ron/BC Says:

    Bernie

    Here is a large size version of MDV S&P MID CAP 400 ETF with the $SPX overlaid. They seem to track each other closely. The vertical dashed green lines mark early November and the vertical dashed red lines mark early May. I’ve made the chart larger to view as I’ve covered from 2008 which is a lot of data. The chart could be sectioned off and made larger with a smaller time covered as well for a bird’s eye view. This chart does also show that period of time of Nov to May also matches up well with the Seasonal Buy and Hold time frame from that Seasonal link you posted. Also what Don Vialoux focuses on basically.

    https://stockcharts.com/h-sc/ui?s=MDY&p=D&yr=12&mn=0&dy=0&id=p48960501391&a=691568201

  50. Larry/ON Says:

    Buy Buy Buy! Two days ago it was Sell Sell Sell! No sign of recession. Lowest US unemployment since 1969. Investors have to be able to hold onto equities that they have confidence in and perhaps trim or add. The worst is to be shook out of a good stock just because of short-term noise. How many times over the course of 2019 have investors been scared that the market is going to fall apart. At this point in time the SP500 is 2.8% from its’ all time high. No catastrophe. We are back at the upper end of that trading band that the market was in in August. As far as I can see there is nothing technically suggesting that this bull market is over or we are near any kind of collapse.

  51. Ron/BC Says:

    Bernie

    Here is another MDY chart with the $SPX overlaid in light pink. I’ve marked out the Nov to May period. This is an old chart I made long ago as you had mentioned this Nov to May bullish period for Mid Cap stocks. Looking over these periods if one followed it without question and didn’t spook out on the selloffs and just got in Nov 1st and exited May 1st you would have done very well each time even when you may have only broke even now and again. But the system works but would have to be followed mechanically. I’ve also put in the Modified MACD 50,200,20 with green vertical dashed buy signals when crossing above the zero line and red dashed lines when crossing below the 50 line.

    https://stockcharts.com/h-sc/ui?s=MDY&p=D&yr=12&mn=0&dy=0&id=p77711486904&a=673066207

  52. Bernie Says:

    Ron/BC,

    Re: seasonality data for MDY, SPY & IEF

    Linked below is the S&P400 Midcap Index seasonality chart, per equityclock.com, for a 20 time frame ending 2018-12-31. The chart definitely shows strong seasonality in Nov-May as discussed.
    https://charts.equityclock.com/sp-400-midcap-index-seasonal-chart

    In the link below MDY’s average monthly returns are displayed in bar chart form per stockcharts.com. When I move the slider on the bottom to the max 20 year time frame and then manually total the individual months I came up with the following yearly average totals which clearly show the seasonal differences:
    Mdy strong period (Nov to May): +9.9%
    MDY weak period (Jun to Oct): -0.3%
    https://stockcharts.com/freecharts/seasonality.php?symbol=MDY&compare=

    For comparison here are the yearly average seasonality totals, also over 20 years, for SPY:
    SPY strong period (Nov to May): +5.6%
    SPY weak period (Jun to Oct): +0.7%

    Lastly, per the strategy of holding a 7-10 yr U.S. bond etf during the Jun-Oct period, here are the average seasonality totals over 18 years for “iShares 7-10 Year Treasury Bond ETF” (IEF):
    IEF (Jun-Oct): 2.3%

    All above data is based on $USD returns. As I mentioned earlier I want to see how Mawer U.S. Equity Fund performed in Nov-May & Jun-Oct periods over the past 20 years. Those results will have to be based on $CAD because the fund is Canadian based and doesn’t have a $USD version. It’ll be a while before I can do this because its quite work intensive. I plan to use morningstar.ca’s interactive chart function for gathering the data.

  53. Ron/BC Says:

    Bernie

    Thanks for the info. Much to consider for a strategy. It’s always the strategy that makes one money. I noticed the MDYG Mid Cap GROWTH ETF outperformed MDY in March and Dec. I don’t know what you think about the MID Cap GRowth ETF. Not a lot of volume with it.

    https://stockcharts.com/freecharts/seasonality.php?symbol=MDYG&compare=MDY

  54. Bernie Says:

    Ron/BC,

    Watching a triple header of football today so little time to comment. There isn’t much thought required to play the U.S. Midcap strategy but it can be daunting in deciding which tickers to play. Many Americans go with IJH/IEF. We can play the strategy in Canada in $CAD with XMC/HTB. You probably wouldn’t like the latter because they’re low volume.

  55. Ron/BC Says:

    The $SPX rallied back to 2950 with negative divergences on the oscillators on the Weekly chart. The chart suggests price needs to test the long term multi year uptrendline and 200ema on the Weekly chart at the 2500 level.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=W&yr=12&mn=0&dy=0&id=p30568326557&a=674087499

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