Tech Talk for Wednesday July 2nd 2008

 

Technical action by S&P 500 stocks was significantly bearish yesterday despite a late recovery in U.S. equity markets. Gold and gold stocks continue to show exceptional technical strength. Gold, gold equity indices and their related ETFs recorded breakouts above key resistance levels.

 

Pre-opening Comments for Wednesday July 2nd

 

9:15 AM EDT: U.S. equity indices are mixed this morning. Dow Jones Industrial Average futures are down 4 points in response to mildly negative economic news. The ADP report measuring employment in the private sector in June indicated a 79,000 job loss.

 

Starbucks is 5% higher in overnight trading following news that the company plans to close up to 600 “underperforming” stores in the U.S. and lay off up to 12,000 employees. Recovery in its stock prices is badly needed. The stock currently has a negative technical profile. Yesterday, it broke support to reach a four year low.

Chart courtesy of StockCharts.com                        www.stockcharts.com

 

Talisman could open lower this morning. Overnight, it announced a dry hole at an exploratory well in the Norwegian North Sea. In addition, Morgan Stanley downgraded the stock from outperform to neutral. Talisman currently has a deteriorating technical profile. The stock peaked six weeks ago at $25.40, broke a key support level and established a double top pattern. Next support is at $17.75.

Chart courtesy of StockCharts.com                         www.stockcharts.com

 

Bombardier received encouraging news overnight. The company is bidding on a contract worth up to $3 billion to build new street cars for Toronto. Bombardier’s biggest competitor bowed out of the competition on Monday. BBD.B has a positive technical profile. Intermediate trend is up. The stock remains above its 50 and 200 day moving average. Strength relative to the TSX Composite Index has been positive since January. The stock has retreated to near the top of a long term trading range where support is likely.

 

Chart courtesy of StockCharts.com                      www.stockcharts.com

 

 

 

 

 

 

Technical Action Yesterday

 

Technical action by S&P 500 stocks was significantly bearish yesterday. Two S&P 500 stocks broke resistance and thirty stocks broke support. Technology and financial service stocks were notable on the list of stocks breaking support.

 

S&P 500 stocks breaking resistance

 

Stock                           Symbol            Previous          New

                                                            Trend              Trend

Cameron Int’l               CAM               Up                   Up

Murphy Oil                   MUR               Neutral             Up

 

S&P 500 stocks breaking support

 

Stock                           Symbol             Previous           New

                                                            Trend               Trend

Advanced Micro          AMD               Down               Down

Alcoa                           AA                   Up                   Neutral

Amazon.com                AMZN             Up                   Neutral

Avalonbay                    AVB                Neutral             Down

Bemis                           BMS                Neutral             Down

Celgene                        CELG              Up                   Up

Cisco                           CSCO             Neutral             Down

Citrix Systems              CTXS              Down               Down

CME Group                 CME                Down               Down

Cummins                      CMI                 Up                   Neutral

CVS Caremark            CVS                Up                   Neutral

Ecolab                          ECL                 Down               Down

Fortune Brands             FO                   Neutral             Down

Franklin Resources       BEN                Up                   Neutral

Freddie Mac                FRE                 Down               Down

Gilead                          GILD               Up                   Neutral

Hartford Financial         HIG                 Down               Down

Hewlett Packard           HPQ                Up                   Down

Intuitive Surgical           ISRG               Down               Down

Lehman                        LEH                 Down               Down

Lorillard                       LO                   Neutral             Down

Lowes                          LOW               Up                   Neutral

McGraw Hill                MHP                Up                   Down

Microsoft                     MSFT              Down               Down

Moody’s                      MCO               Neutral             Down

Nucor                          NUE                Up                   Down

Starbucks                     SBUX              Down               Down

Texas Instruments         TXN                Up                   Down

Vulcan                          VMC               Neutral             Down

Xerox                           XRX                Neutral             Down

 

Pre-opening Comments for Tuesday July 1st

(Charts have been updated to yesterday’s close)

 

U.S. equity index futures are sharply lower this morning following significant weakness in European equity markets and higher crude oil prices. Dow Jones Industrial Average futures are off 99 points in pre-opening trade. S&P 500 Index futures are off 13 points. The S&P 500 Index is testing its March low at 1256.98. The official announcement of a Bear Market measured by a 20% reduction in the S&P 500 Index from its high likely will be recorded today.

Chart courtesy of StockCharts.com                     www.stockcharts.com

 

Update comment: U.S. equity markets opened sharply lower at the opening. At its lowest point, the Dow Jones Industrial Average was off 167 points and the S&P 500 Index lost 19 points to 1261. Most of the technical damage was done in early trading.

 

Weakness in European equity markets was triggered by a 7% fall in UBS. UBS announced this morning that additional senior management changes will be made.

Traders are concerned that the company is about to announce additional sub-prime related write offs. UBS is testing six year lows.

Chart courtesy of StockCharts.com                         www.stockcharts.com

 

Interesting Charts

 

Gold and gold stocks had a good day on U.S. equity markets yesterday.

Chart courtesy of StockCharts.com                     www.stockcharts.com

Chart courtesy of StockCharts.com                     www.stockcharts.com

Chart courtesy of StockCharts.com                         www.stockcharts.com

 

‘Tis the season to own gold stocks! Their period of seasonal strength from July to September has appeared earlier than usual. The following chart shows optimal entry and exit points for the seasonal trade during the past seven years for the TSX Gold Index:

Chart courtesy of StockCharts.com                                  www.stockcharts.com

 

 

Adrienne Toghraie’s “Trader’s Coach” Column

 

 

 

Hidden in a Trader’s Closet

 

By Adrienne Toghraie, Trader’s Coach
www.TradingOnTarget.com

 

 

 

Yesterday, when I called a friend to say that I would be stopping by his house, he told me that he would need to clean first.  “Nonsense.” I said, “Your house is immaculate.”

 

“Yes, but you haven’t seen inside my closets,” was his reply.

 

My friend’s remark has gotten me thinking about all of the traders with whom I have worked over the past twenty years whose lives look immaculate on the surface. But, hidden in the closets of their lives are issues, problems, secrets, and negative or life-altering experiences that they do not let anyone see.

 

The problem with hiding your “emotional junk and disorder” in your psychological closets is the same one my friend has with his own literal hidden junk and disorder:  you live with the fear of discovery. This fear prevents friends and others from getting too close to you to see what you are hiding. But, rather than protecting yourself from embarrassment, hurt, and shame, this practice of concealment and the fear it creates will leave you vulnerable in a lot of ways:

 

1.       You must always be careful about what you say so as not to reveal your hidden “stuff.” But, like a liar who must tell one lie after another in order to conceal the first lie, whenever you are hiding something in your psychological closets, you will find yourself skirting the truth with one white lie on top of another. You may even come to believe all of your stories – having told them so many times. Nevertheless, one slip and you are caught in a trap of your own making.

 

2.       A trader needs to lead an impeccable life. By this, I mean that his life needs to be as transparent as possible. Any hidden issues will inevitably produce self-sabotaging behaviors. This result occurs because hidden issues are unresolved, like a story without a conclusion.  Stuffing the issue into a closet does not make it go away. In fact, like a sore that never heals, it simply festers, spreading poison in small quantities that sap your energy and resolve.

 

3.       My friend felt guilty and ashamed about the junk that he had hidden away in his closets. Traders with “stuff” hidden in their psychological closets often experience guilt and shame, as well, knowing that they have secrets that are well-concealed. They feel bad about themselves because of their secrets but then those feelings, in turn, make them unable to deal openly with their secrets. The situation turns into a Catch-22, where the worse they feel about themselves, the less likely they are to deal with the problem, so the worse they feel about themselves. These feelings sap self-confidence, one of the magic ingredients for success in trading.

 

4.       Traders who hide their emotional junk and disorder are vulnerable to emotional blackmail (to say nothing of real blackmail) from anyone who unlocks his closet and sees what is inside. Not to put too dramatic a point on this issue, there are people who thrive on the vulnerabilities of others. These snipers have a genius for manipulation, sensing immediately the weak points in a person’s armor. But, if a trader has nothing to hide, he will not have any weak points. Since it is not always easy to predict who will turn out to be the snipers in your business or in your personal life.

 

Cleaning out your closets

I have made it a mission to encourage traders to create order in their home and work environment, instructing them to clean out their drawers and closets. The same advice is even more important for their psychological closets. Interestingly enough, much of the strategy that is applicable for cleaning out your real closets is equally useful in cleaning out your psychological closets, as well.

 

1.       Make a commitment to deal with the junk hidden away in your closets. The most effective way to build the motivation for this job is to imagine what it would be like if all of those hidden issues were aired out and addressed. What would it feel like to be free of the fear, the guilt, the shame, and the terrible weight of those secrets? If you can imagine what that transparency in your life would feel like, you will suddenly experience a tremendous energy for making it happen.

2.       Decide whether you are able to do the job yourself or whether you will need outside professional help. Some people are able to do this on their own. If you are one of those people, then I urge you to get started. First, you should set aside a specific time each day or each week when you are willing to work on this project. I instructed a trader who lived with chaos in the physical closets of his life to just take on one unpacked box a week each Saturday morning. If you are willing to tackle a single issue for one hour each week, eventually you will be set free of them. Just do not attempt to tackle them all at once. No one is that strong. So, take out one issue into the sunlight by writing it down on piece of paper and looking at it. Read it aloud to yourself. Examine it objectively like it was a flat tire or a leak under your sink. What is the problem? What would it take to fix it? What resources are required?  Develop a plan and get started on it, one small step at a time.

3.       If you have decided that the “stuff” you are hiding in your psychological closet is too difficult or frightening or overwhelming for you to deal with without help, then immediately look for someone with whom you can feel safe to listen to you without judgment, someone whose opinions and guidance you trust – and get started.

4.       Each time you have cleared out even the smallest portion of your closet, remember to reward yourself. The first step in rewarding yourself is to relish the feeling of being freed from the burden of that secret. Smile as you imagine the little bit of light you have let into your life. Now, go out and reward yourself with a gift, an experience, or a secret pleasure. Each time you reward yourself, you will be sending your unconscious mind a message that taking the risk and engaging in the hard work of cleaning out your closet means that you will be rewarded. And, you will be in more ways than one. Your trading will take a step up in performance as your confidence increases, and your personal life will also take a step up as you open doors to closeness and trust that you had sealed shut.

 

 

 

FREE WEBINAR
Presented by Adrienne Toghraie, Trader’s Coach



An Evening With Adrienne

Tuesday, July 15
9:00 am & 4:30 pm (EST)

 

For Log In Details 
Phone - 919-851-8288  or Email – Adrienne@TradingOnTarget.com

 

Iain Fraser’s Column

Sell in May and go away? How has this strategy worked so far? The answer is very well, especially in New York. The Dow Jones Industrial Average is down a whopping 1300 points in the month of June; led by anything financial. In Toronto, the TSX60 index is down 3.7% in June. But here, as we sit today – there is one even; one down big time; and one up big time. The down sector is, of course, the financials. But, our five big bank stocks are now down enough that we have made pertinent observations in our current report. As a group, the financials here are down 10% in June. The materials sector is up 9% in June; but remember this sector includes the golds and the very hot fertiliser stocks. Surprisingly, despite the continuing advance in crude oil prices, this sector is just even in the month of June. One more comment; if you want to keep up with the TSX averages, or surpass them, we think your portfolio should be roughly in line with the TSX weightings; these weightings are approximately 30% financials; 30% energy; and 20% materials. Our guess is that most portfolios are equal or overweight in financials; equal or overweight in energy; and underweight in materials.

Chart courtesy of StockCharts.com                 www.stockcharts.com

Chart courtesy of StockCharts.com                 www.stockcharts.com

 

Editor’s Note: Tech Talk is converting over time to a new server and better quality service. For a sneak preview of the new site, click on www.timingthemarket.ca/techtalk

 

Disclosure: Mr. Vialoux does not own securities mentioned in this report.

Disclaimer: Comments and opinions offered in this report 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.