Tech Talk for Friday May 16th 2008

(Next Tech Talk will appear on Monday May 19th: Victoria Day holiday in Canada)

 

Pre-opening Comments for Friday May 16th

 

9:00 AM EDT: U.S. equity index futures are higher in overnight trading. Dow Jones Industrial Average futures added 22 points. Traders were cheered by encouraging news released last night prior to the American Society of Clinical Oncology (ASCO) conference. Important breakthroughs for treating cancer were announced by biotech companies including Genentech, GlaxoSmithKline, AstraZenaca, Eli Lilly and Pfizer. Breakthroughs by Genentech’s Avastin were notable.

 

On the charts, Genentech is trying to recover from near long term support near $67.

Chart courtesy of StockCharts.com                            www.stockcharts.com

Biotech ETFs also are showing early signs of bottoming. Historically, the sector has a period of seasonal strength from August to the second week in January due to a series of health care conferences where important news on medical break throughs is released. Climax is the JP Morgan healthcare conference held in the second week in January.

Chart courtesy of StockCharts.com                     www.stockcharts.com           

Chart courtesy of StockCharts.com                   www.stockcharts.com

 

Crude oil prices are higher again this morning after Goldman Sachs raised price assumptions.

 

 

Technical Action Yesterday

 

Technical action by S&P 500 stocks was bullish again yesterday. Six more S&P 500 stocks broke resistance. One stock broke support.

 

S&P 500 stocks breaking resistance

 

Stock                           Symbol            Previous          New

                                                            Trend              Trend

CVS                            CVS                Neutral             Up

Ensco                           ESV                 Up                   Up

Genuine Parts               GPC                Down               Up

Marsh & McLennan     MMC              Up                   Up

Novell                          NOVL             Up                   Up

Weyerhaueser              WY                  Down               Up

 

S&P 500 stocks breaking support

 

Stock                           Symbol            Previous          New

                                                            Trend              Trend

Hospira                        HSP                 Neutral             Down

 

Technical action by TSX Composite stocks also was bullish yesterday. Four TSX stocks broke resistance and two stocks broke support.

 

TSX stocks breaking resistance

 

Stock                           Symbol            Previous          New

                                                            Trend              Trend

Bombardier                  BBD.B             Up                   Up

Cdn. Western Bank      CWB               Down               Up

Lundin Mining               LUN                Down               Up

Sino Forest                   TRE                 Down               Up

 

TSX stocks breaking support

 

Stock                           Symbol            Previous          New

                                                            Trend              Trend

First Service                 FSV                 Down               Down

High River Gold            HRG                Down               Down

 

 

Pre-opening Comments for Thursday May 15th

(Charts have been updated to yesterday’s close)

 

9:15 AM EDT: U.S. equity index futures are slightly higher before the opening. Dow Jones Industrial Average futures advanced 24 points. Economic news released this morning had a neutral impact on futures. Consensus for the Empire State Index was 1.0 versus 0.6. Actual was -3.2.

 

Equity markets are waiting for a series of economic news events expected to be released at 9:15 AM and 10:00 AM.  In addition, Federal Reserve chairman Ben Bernanke is scheduled to discuss risk management and bank organizations in a speech starting at 9:30 AM EDT.

 

U.S. equity market futures were helped by better than expected first quarter earning by JC Penney. Consensus was $0.49 versus $1.04 per share. Actual was $0.54 per share. JC Penney has a mixed technical profile. Intermediate trend is neutral. Short term momentum indicators are neutral. The stock has been neutral relative to the S&P 500 Index during the past four months.

 

Chart courtesy of StockCharts.com                         www.stockcharts.com

 

General Electric is higher this morning on news that T. Boone Pickens has ordered $2 billion of wind mill energy equipment from the company. General Electric currently has a negative technical profile. Intermediate trend is down. The stock trades below its 50 and 200 day moving average. However, the stock appears to be trying to form a base building pattern following is negative first quarter earnings surprise. A tight trading range between $31.50 and $33.60 has developed during the past month.

Chart courtesy of StockCharts.com                        www.stockcharts.cm

 

First Service is expected to open lower following a significantly lower than expected first quarter earnings report. Consensus was a profit of $0.06. Actual was a loss of $0.34 per share. Traders probably had a hint about the report just before the close yesterday when the stock fell sharply.

Chart courtesy of StockCharts.com                    www.stockcharts.com

 

 

 

Tech Talk Comments on the FP Trading Desk Site

(Posted yesterday at

 

12:15 PM EDT: FP Trading Desk headline reads, “Correction may be near, but don’t confuse this with a bear market”. Following is a link to the report: http://network.nationalpost.com/np/blogs/tradingdesk/archive/2008/05/15/correction-may-be-near-for-tsx-but-don-t-confuse-this-with-a-bear-market.aspx

 

Leon Tuey, one of Canada’s most respected technical analysts is calling for a correction by the TSX Composite starting in June. He also is calling the correction an important buying opportunity. Leon’s call for a short term correction is understandable. Since January 22nd when the TSX Composite Index bottomed at 11,933, a gain of 23.4% has been recorded, an exceptional return for a four month period. Short term momentum indicators (MACD, RSI and Stochastics) are overbought and are due for a correction lasting into summer. Indeed, the last time that MACD was this overbought was in October 2000.

Chart courtesy of StockCharts.com                              www.stockcharts.com

 

FP Trading Desk headline reads, “Research in Motion entering a higher mass market appeal” Following is a link to the report: http://network.nationalpost.com/np/blogs/tradingdesk/archive/2008/05/15/research-in-motion-entering-a-higher-mass-market-appeal-level.aspx

 

Research in Motion continues to have a positive technical profile. Intermediate trend is up. The stock trades above its 50 and 200 day moving averages. Strength relative to the S&P 500 Index and TSX Composite Index has been positive during the past four months. The recent break out above its all time high implies an intermediate upside technical target of $194. A word of caution! Short term momentum indicators (MACS, RSI and Stochastics currently are overbought. Purchases on weakness to its breakout level at $137.01 U.S. are preferred.

Chart courtesy of StockCharts.com                    www.stockcharts.com

 

FP Trading Desk headlines reads, “Oil to average $115 U.S. in 2008 and $120 U.S. in 2009: UBS”. Following is a link to the report: http://network.nationalpost.com/np/blogs/tradingdesk/archive/2008/05/15/oil-to-average-115-in-2008-and-120-in-2009-ubs.aspx

 

Several U.S. investment firms including UBS raised price assumptions for crude oil this morning. Short term momentum indicators show that crude oil is vulnerable to at least a short term correction that could see a decline to support just below $100. MACD is more overbought than at any time during the past 10 years. Stochastics and RSI are showing early signs of rolling over. Crude oil has a history of reaching an important seasonal peak in the month of May. History is about to repeat itself.

Chart courtesy of StockCharts.com                         www.stockcharts.com

 

Weekly Bullish Percent Indices for U.S. Sectors

Most bullish percent indices continued to trend higher last week and most remained above their 15 day moving average. However, nine of the eleven indices already are above the 50% level and three indices are showing early signs of rolling over from an intermediate overbought level. The easy money already has been made in most sectors, but additional upside potential remains. The exceptions are energy, transportation and materials where intermediate downside risk exceeds intermediate upside potential.

Sector                         Index               Above/Below                          Comment

                                    Change           15 day Moving Average

Info Technology            Higher              Above                                      Above 50%

Transportation              Lower              Below                                      Rolling over

Financial Services         Higher              Above                                      Above 50%

Telecommunications      Higher             Above

Consumer Staples         Higher              Above                                      Above 50%

Basic Materials             Higher              Above                                     Rolling Over

Consumer Discretion    Higher             Above                                      Above 50%

Industrials                     Unchanged      Above                                      Above 50%

Health Care                  Higher              Above

Energy                          Higher              Above                                     Rolling Over

Utilities                         Higher              Above                                      Above 50%

 

                                    Bolded items are changes from last week

                                    All Charts courtesy of StockCharts.com

 

 

 

 

 

 

 

 

 

 

Weekly Technical Comment for Claymore’s Canadian ETFs as of May 15th 2008

 

Another profitable week for holders of Claymore ETFs! Technicals continued to improve for most ETFs.

 

ETF                 Symbol  Intermediate Above 50  Above 200  MACD         Seasonal  RS

                                       Trend             Day MA Day MA                          Trait                    

Canadian          CRQ       Up                Yes             Yes             Peaking        Neutral        N3

Cdn. Dividend  CDZ       Neutral          Yes             Yes             Peaking        Neutral      2+

U.S.                 CLU       Down            Yes            No              Peaking        Neutral     5 +

Oil Sands         CLO       Up                Yes            Yes             Peaking         Up             4 +

BRIC               CBQ       Up                 Yes            Yes             Peaking         N/A          14+

International      CIE         Up                Yes             No              Peaking         Neutral     6+

Preferred          CPD       Down            Yes            No              Uptrend         N/A          N/A

Japan               CJP         Neutral          Yes            Yes             Peaking        Neutral     7+

Global Mining   CMW     Up                Yes             Yes             Peaking         Neutral     9+

Global Water    CWW     Down             Yes            Yes             Peaking         N/A          6+

Global Ag.        COW      Up                  Yes            NA             Downtrend     Neutral     5+

Bank & Lifeco  CEW      Up                  Yes            NA             Peaking           Up           N2

Natural Gas      GAS       Up                  Yes            NA             Peaking          Neutral     2+

Bolded items are changes from last week

RS  Relative Strength

+     Number of months with positive performance relative to its benchmark

-      Number of months with negative performance relative to its benchmark

N    Number of months with neutral performance relative to its benchmark

 

Feature chart this week is the Claymore U.S. Fundamental ETF (Canadian Dollar hedged). Units have been a stellar performer since reaching their low at $17.85 in mid March. Volume continues to grow. Average daily volume has improved to 15,000 units per day. Units potentially are forming a reverse head and shoulders pattern. The pattern will be completed with a breakout above $20.51. Strength relative to the S&P 500 Index has been slightly positive during the past five months. Short term momentum indicators are mixed: MACD is short term overbought and peaking. RSI continues to trend higher, but already has reached a short term overbought level. Stochastics are recovering from a short term oversold level.

Chart courtesy of StockCharts.com                     www.stockcharts.com

 

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.