Tech Talk for Monday May 12th 2008
Pre-opening Comments for Monday May 12th
9:10 AM EDT:
Encana is expected to open higher this morning following news that the company plans to split into two companies early next year. One company will focus on oil production and refining. The other company will focus on natural gas production. Encana has a positive technical profile. Intermediate trend is up. The stock trades above its 50 and 200 day moving average. Strength relative to the TSX Composite Index and S&P 500 Index remains positive. The stock is expected to open above resistance at its all time high at $88.06.
Chart courtesy of StockCharts.com www.stockcharts.com
Research in Motion is
expected to open at another all time high this morning following a series of
news events over the weekend. The company announced plans for its next
Blackberry called Bold. It announced plans to launch its Blackberry service in
Chart courtesy of
StockCharts.com www.stockcharts.com
WestJet also is expected to open higher this morning following news that it plans to add a fuel surcharge to ticket prices. WestJet has an improving technical profile. The stock recently found support just below $16.00. Short term momentum indicators (MACD, RSI and Stochastics) are recovering from short term oversold levels.
Chart courtesy of StockCharts.com www.stockcharts.com
Outlook this week
Economic news focuses
on retail sales and inflation.
Economic Report Period Release
Date Time Consensus Previous
Retail Sales April May 13 8:30 0.0% 0.2%
Ex Autos April May 13 8:30 0.2% 0.1%
Business Inventories March May 13 10:00 0.5% 0.6%
Consumer Prices April May 14 8:30 0.3% 0.3%
Core April May 14 8:30 0.2% 0.2%
Capacity Utilization April May 15 9:15 80.2% 80.3%
Industrial Production April May 15 9:15 -0.2% 0.3%
Housing Starts April May 16 8:30 940 K 947 K
Building Permits April May 16 8:30 912 K 927 K
Consumer Sentiment May May 16 10:00 63.0 62.6
Source: www.cnbc.com
First quarter earnings reports are winding down. Prominent companies expected to report this week include Wal-mart, Deere, Hewlett Packard and JC Penney.
Company Qtr. Consensus Previous
Monday May 12th
Russel Metals 1 $0.52 Cdn. $0.46 Cdn.
Sprint Nextel 1 0.20 0.18
Tuesday May 13th
Cameco 1 0.40 Cdn. 0.14 Cdn.
IAMGold 1 0.13 0.04
Panamerican Silver 1 0.39 0.13
Wal-Mart 1 0.75 0.68
Wednesday May 14th
CAE 4 0.17 Cdn. 0.14 Cdn.
Deere 2 1.75 1.36
Macy’s 1 (0.02) 0.16
Thursday May 15th
Hewlett Packard 2 0.84 0.70
JC Penney 1 0.49 1.04
Kohl’s 1 0.42 0.64
Sources:
www.cnbc.com for
Trends
The Up/Down ratio for S&P 500 stocks improved from 1.62 to (264/162=) 1.63 last week. Eleven stocks broke resistance (including Verisign on Friday) and twelve stocks broke support (including eight stocks on Friday). The Mark Up phase continues.
Bullish Percent Index for S&P 500 stocks rose again last week from 54.20% to 58.00%. It remains above its 15 day moving average. Intermediate trend remains up.
Chart courtesy of StockCharts.com www.stockcharts.com
The Up/Down ratio for TSX Composite stocks jumped from 1.12 to (102/63=) 1.62. Nineteen stocks broke resistance (including HPX, NVA, PXE and ACE on Friday) and five stocks broke support (including Stantec on Friday). The Mark Up phase continues.
Bullish Percent Index for TSX Composite stocks improved again from 45.63% to 49.21% and remains above its 15 day moving average. Intermediate trend remains up.
Chart courtesy of StockCharts.com www.stockcharts.com
The S&P 500 Index lost 1.81% last week. Its upward intermediate uptrend remains. The Index found short term resistance just below its 200 day moving average at 1429. Short term momentum indicators (RSI, MACD and Stochastics) are overbought and have rolled over. Short term downside risk likely is to its 50 day moving average at 1353.
Chart courtesy of StockCharts.com www.stockcharts.com
Percent of S&P 500 stocks trading above their 50 day moving average fell from 78.56% to 67.54%. Percent has rolled over and is weakening from an intermediate overbought level.
Chart courtesy of StockCharts.com www.stockcharts.com
Percent of S&P 500 stocks trading above their 200 day moving average eased from 46.29% to 40.28%. However, percent remains in an intermediate uptrend.
Chart courtesy of StockCharts.com www.stockcharts.com
The Dow Jones Industrial Average fell 2.39% last week. Intermediate trend remain up. The Average found short term resistance just above its 200 day moving average. Short term downside risk likely is to its 50 day moving average at 12,502. Short term momentum indicators (RSI, MACD and Stochastics) are overbought and are rolling over. Strength relative to the S&P 500 Index has started to trend lower.
Chart courtesy of StockCharts.com www.stockcharts.com
Bullish Percent Index for Dow Jones Industrial Average stocks eased from 63.33% to 60.00%, but remains above its 15 day moving average. Intermediate trend remains up, but the Index already has reached an intermediate overbought level.
Chart courtesy of StockCharts.com www.stockcharts.com
Bullish Percent Index for NASDAQ Composite Index stocks was virtually unchanged at 38.61% last week and remains above its 15 day moving average. The Index continues to recover from an intermediate oversold level.
Chart courtesy of StockCharts.com www.stockcharts.com
The NASDAQ Composite Index eased 1.27% last week. The Index found short term resistance just below its 200 day moving average at 2518. Short term momentum indicators (RSI, MACD and Stochastics) are overbought and have rolled over. Short term downside risk probably is to its 50 day moving average at 2334. Strength relative to the S&P 500 Index remains positive.
Chart courtesy of StockCharts.com www.stockcharts.com
The Russell 2000 Index eased 0.78% last week. It also found resistance just below its 200 day moving average. Short term momentum indicators (RSI, MACD and Stochastics) are overbought and rolling over. Strength relative to the S&P 500 Index remains negative, but is showing early signs of changing trend.
Chart courtesy of StockCharts.com www.stockcharts.com
The Dow Jones Transportation Average fell 2.16% last week. Intermediate trend remains up. Short term momentum indicators (RSI, MACD and Stochastics) are overbought and have rolled over. Strength relative to the S&P 500 Index remains positive. Short term downside risk likely is to its 50 day moving average at 4885.
Chart courtesy of StockCharts.com www.stockcharts.com
The TSX Composite Index added another 1.69% last week and is testing its all time inter-day high at 14,646.82. Since its January 22nd low, the Index has gained 21.2%. Short term momentum indicators (RSI, MACD and Stochastics) are overbought, but continue to trend higher. Strength relative to the S&P 500 Index remains positive.
Chart courtesy of StockCharts.com www.stockcharts.com
Percent of TSX stocks trading above their 50 day moving average improved from 68.67% to 71.49%. It remains intermediate overbought, but has yet to roll over.
Chart courtesy of StockCharts.com www.stockcharts.com
Percent of TSX stocks trading above their 200 day moving average improved from 45.92% to 47.66%. Intermediate trend remains up.
Chart courtesy of StockCharts.com www.stockcharts.com
The
Chart courtesy of StockCharts.com www.stockcharts.com
The Nikkei Average gave up 2.80% last week. The Average briefly broke resistance at 14,105, but was unable to hold. Short term momentum indicators (RSI, MACD and Stochastics) are overbought and rolling over. Strength relative to the S&P 500 Index remains positive.
Chart courtesy of StockCharts.com www.stockcharts.com
The
Chart courtesy of StockCharts.com www.stockcharts.com
European equity indices also moved lower last week. The London FT Index slipped 0.17%, the Frankfurt DAX Index eased 0.57% and the Paris CAC Index fell 2.15%.
The U.S. Dollar was virtually unchanged last week. It remains in an intermediate uptrend. Resistance exists between 74.48 and 77.85. Short term momentum indicators continue to trend higher from an oversold level.
Charts courtesy of StockCharts.com www.stockcharts.com
The Euro also was virtually unchanged last week.
The Canadian Dollar added 1.31 cents last week. It remains in a six month trading range between 96.69 and 102.99. Momentum indicators remain neutral.
Chart courtesy of StockCharts.com www.stockcharts.com
The CRB Index managed to reach a new high on Friday thanks mainly to strength in energy prices. However, short term momentum indicators are overbought and have rolled over
Chart courtesy of StockCharts.com www.stockcharts.com
Gold moved slightly higher last week. Support was found at $846.40. Short term momentum indicators are oversold and trying to recover.
Chart courtesy of StockCharts.com www.stockcharts.com
Silver also gained slightly last week. Support is indicated at $16.06. Short term momentum indicators are trying to recover from oversold levels.
Chart courtesy of StockCharts.com www.stockcharts.com
Crude oil continues to surprise on the upside. Short term momentum indicators remain overbought. Support is indicated at $110.30.
Chart courtesy of StockCharts.com www.stockcharts.com
Ditto for Natural Gas!
Chart courtesy of StockCharts.com www.stockcharts.com
Ditto for unleaded gasoline prices!
Chart courtesy of StockCharts.com www.stockcharts.com
Copper continues to roll over from an
intermediate overbought level.
Chart courtesy of StockCharts.com www.stockcharts.com
Ditto for Aluminum!
Charts courtesy of StockCharts.com www.stockcharts.com
The yield on 10 year treasuries eased last week after testing the top of a five month trading range between 3.28% and 3.96%. Short term momentum indicators are overbought and rolling over. Long term rates likely will stabilize near current levels.
Other Factors
Early technical signs of the Peaking phase have appeared. The Peaking phase occurs after the Mark Up phase. Typical technical signs of a Peaking phase include:
- Negative breadth (i.e. more stocks going down than going up). That happened last week.
- Establishment of new resistance levels by a wide variety of stocks in the S&P 500 Index or the TSX Composite Index. That has not happened yet.
- A decline in the Up/Down ratio for S&P 500 Index and TSX Composite stocks. That hasn’t happened yet.
- More stocks breaking support than breaking resistance. That happened with S&P 500 stocks last Thursday and Friday.
- A
roll over of short term momentum indicators by major
- Resistance found at a logic place on the charts (e.g. at or near at 200 day moving average following a recovery). That happened last week.
Technical evidence is not conclusive. Accordingly, it’s too early to say that the Peaking phase has occurred.
Energy prices are having a strong influence
on
Favourable influences of better than
expected first quarter earnings reports are reaching an end as the reporting
season winds down. What are prospects for the second quarter earnings by
major
Media comments have become less bearish
recently. A few pundits were brave enough to suggest that a recession in
the
Rhetoric from the Democrat presidential
candidates is starting to impact selected stocks and sectors in the
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Currencies and interest rates in the
Favourable seasonal influences for most sectors are winding down. Equity markets have entered into a period of random performance between May and October when recurring annual reasons for strength are lacking.
The Bottom Line
The easy money already has been realized in North American equity markets and most sectors. Additional upside potential remains (if and when the energy sector rolls over). However, the upside part of the current intermediate cycle clearly is “long in the tooth”. For most sectors, it’s a question of when to take trading and seasonal profits.
Tech Talk’s Weekly Column in the Financial Post
(Published Saturday and available by paid subscription at www.nationalpost.com )
An Update on the
The
Seasonal influences
The sector has a
period of seasonal strength from the end of November to the end of May. The
“sweet spot” during the period of seasonal strength is from the end on January
to the middle of May. The trade from the end of November to the end of May has
been profitable in nine of the past 10 periods for an average return per period
of 20.5%. Peak for the sector frequently occurs early in May when the Offshore
Technology Conference is held. This year the conference was held from May 5th
to May 8th in
Unlike most seasonal trades, the oil service sector has double seasonality. Most sectors experience a period of seasonal strength followed by a period of random performance. The oil services sector has a period of seasonal strength followed by a period of seasonal weakness. The Philadelphia Oil Service Index has advanced in only three of the past ten periods from the end of May to the end of November for an average loss per period of 5.12%. The start of weakness in the sector has a high correlation with seasonal weakness in crude oil and natural gas prices from May to July.
Chart courtesy of StockCharts.com www.stockcharts.com
Fundamental
influences
Political rhetoric in
the
Technical influences
The
The Bottom Line
Take seasonal profits
in
Adrienne Toghraie’s “ Trader’s Coach” Column
Misreading the
Signals
By Adrienne Toghraie, Trader’s
Coach
www.TradingOnTarget.com
A movement occurs in the markets and you misjudge the indicators. A colleague tries to warn you about a threat to your business and you misinterpret his intentions. Your son tells you about a problem he is having at school and you overreact. Suddenly, you are misreading signals at work and in your personal life. Why is this happening and what can you do about it?
Mood and judgment
We would like to believe that our judgments are rational and based strictly on the facts available, but they are interpretations of the facts. And in most cases, we are very selective about which facts we actually factor into our judgments. In reality, they are generally a minor factor in the making of our judgments. Research into the decision-making process has demonstrated over and over again how much our decisions and judgments are based on mood rather than fact. If you are in a good mood, your emotional energy level will be high and your judgments will be made in a positive light. However, if you are in a dark mood, your emotional energy levels will be low and your judgments will tend to be negative ones.
Our moods are the last link in a chain of reactions. The first link is the way we talk to ourselves about who we are and what our life is all about. This first link is called self-talk. All day long we are talking to ourselves like the voice-over in a documentary, interpreting what is happening, narrating the scene, making sense of the action. This self-talk influences our thinking, the second link in the chain. Our thinking, in turn, creates our emotions, the third link in the chain. Our emotions create our moods, the final link in the chain. Then, our moods influence our judgments, and we either read the signals we are getting accurately and positively, or we cast a negative light on everything around us and make judgments that are off the mark.
The cost of misreading signals
Every trader knows full well the potential cost of misreading a trend or misreading a signal from his trading methodology or system. The loss from a misread trading signal can be small but it can also be devastating. Even small losses, however, can accrue long enough over time to a bled-out trading business.
The cost of misread signals outside of the actual trading desk can also impact your trading, as well. The relationships a trader has with his colleagues, business associates, friends and family are all part of the interwoven social and business network that supports his trading. This network can unravel as a trader continues to misread the signals that are constantly being sent to him by all of these important people in his life.
Taking control
At some point, you realize that you are misreading signals and you desperately want to plug the leak in your brain fluid. But where is the break in the system and how do you repair it?
If we go back to the original analogy of the links in the chain, you will see that the problem all begins with your own self-talk. Let us listen in to some self-talk that leads to dark moods, which leads to misreading signals:
“This is a terrible day. Everything’s going wrong. I’m so tired and I feel awful. My life is a mess. I can’t do anything right. Everyone around me is stupid and untrustworthy. The markets are out of control. My system is inadequate. There’s no way anyone can make money in these markets. Bad things always happen to me, etc.”
The good news is that your self-talk is in, part under, your own conscious control. Although your self-talk originates from unconscious images you have of yourself and your life that come from experiences long forgotten, you have the ability to reshape them from the outside.
The bad news about changing your self-talk is that you could feel a great deal of resistance to changing it. The reason is that your self-talk is very comfortable for you – it feels right. Most of the time, you are not even listening consciously to how you talk to yourself, since you do it so automatically. Changing your self-talk will feel like wearing in a new pair of shoes that are too tight at first and feel wrong on your feet. In addition, changing your self-talk will imply that it was wrong in the first place. This idea that you are wrong about yourself and the way your life works will make you want to resist even harder.
So, getting past your own resistance to changing your self-talk may turn out to be the highest hurdle you will have to surmount in improving your moods and your judgment. But, in my experience, you will find your resistance melting away after you start listening to your self-talk without judgment – just listening to it. You may find the experience to be so shocking and so embarrassing that you will be highly motivated to change it.
Now, all you have to do is to start consciously rewriting your self-talk so that it is positive. Again, this will feel awkward and unnatural at first, but give it time. Remember: your current brand of self-talk is the product of many, many years of misinterpreting the facts.
What you will begin to see is that your mood will begin to lift, like the fog when the sun comes out. As your mood is elevated, your awareness of the facts will also open up and your perception of them will increase in accuracy. At that point, you will discover that you will gradually be able to read those signals, not only from your trading but from the rest of your life.
TOP PERFORMANCE SEMINAR
(see www.TradingOnTarget.com
for details)
July
26 & 27 – Chicago
$2,500
(Pro-rated Early Enrollment Discount)
Adrienne Toghraie, Trader’s Coach
Email – Adrienne@TradingOnTarget.com
919-851-8288
Brooke Thackray’s Interview
on BNN Television on Friday
Brooke focused on current seasonal trends. Following is a link to the interview:
http://watch.bnn.ca/market-call/may-2008/market-call-may-9-2008/#clip51872
Matt’s Blogs
Matt Blackman notes in his weekly blog that “Stocks run out of gas”. Following is a link to his weekly blog: http://tradesystemguru.com/content/blogcategory/34/68/
Matt Caruso notes in his weekly blog that “Gold in bullish consolidation”. Following is a link to his weekly blog: http://tradesystemguru.com/content/blogcategory/35/69/
Merv’s uranium stock blog
Merv Burak remains short term bullish on uranium stocks. Following is a link to his blog:
http://techuranium.blogspot.com:80/
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.