Tech Talk for Wednesday May 21st 2008
Pre-opening Comments for Wednesday May 21st
9:10 AM EDT:
Chart courtesy of
StockCharts.com www.stockcharts.com
This morning Bombardier announced a joint venture with a Russian company to develop a new generation of electric locomotives for the Russian market. Bombardier currently has a positive technical profile. The stock is in an intermediate uptrend and recently broke to a five year high on higher than average volume.
Chart courtesy of
StockCharts.com www.stockcharts.com
Traders are waiting
anxiously for release of the weekly
Technical Action Yesterday
Technical action by S&P 500 stocks was (surprise) quietly bullish yesterday. Four S&P 500 stocks broke resistance and one stock broke support.
S&P 500 stocks
breaking resistance
Stock Symbol Previous New
Trend Trend
Exelon EXL Up Up
Exxon Mobil XOM Up Up
PPL Corp. PPL Up Up
Range Resources RRC Up Up
S&P 500 stocks breaking support
Stock Symbol Previous New
Trend Trend
Apollo APOL Up Neutral
Technical action by TSX Composite Index stocks also was quietly bullish. Three TSX stocks broke resistance and none broke support.
TSX Composite Index stocks breaking
resistance
Stock Symbol Previous New
Trend Trend
Ballard BLD Down Up
Eldorado ELD Up Up
Niko Resources NKO Neutral Up
Pre-opening Comments for Tuesday May 20th
(Charts have been updated to yesterday’s close)
9:05 AM EDT:
Equity index futures moved lower following release of the April Producer Price Index. Consensus was an increase of 0.4% versus 1.1% in March. Actual was an increase of 0.2%. Consensus for Core PPI was an increase of 0.2% versus 0.2% in March. Actual was an increase of 0.4%.
The U.S. Dollar weakened following release of the PPI report. Commodity prices strengthened.
Home Depot is slightly higher in overnight trade after reporting higher than expected first quarter operating earnings. Consensus was $0.37 versus $0.48 per share. Actual was $0.41 per share. Home Depot has an improving technical profile. The stock appears to be forming a base building pattern. The pattern is broken on the upside on a move above $30.80.
Chart courtesy of
StockCharts.com www.stockcharts.com
BCE traded lower in
Chart courtesy of StockCharts.com www.stockcharts.com
Tech Talk Comments on the FP Trading Desk site
(Posted yesterday at http://www.financialpost.com/trading_desk/index.html )
10:30 AM EDT: FP Trading Desk headline reads, “Buy Talisman ahead of meetings: Citigroup”. Following is a link to the report:
Talisman currently has a positive technical profile. The stock recently broke to an all time high. Intermediate trend is up. The stock trades above its 50 and 200 day moving average. Strength relative to the TSX Composite has been positive since January. Short term momentum indicators by definition are overbought. Indeed, MACD is more overbought than at any time during the past 10 years. A word of caution! The stock has “gone parabolic” and has advanced 58% since January 23rd 2008. Guessing a peak in a stock that has gone parabolic is a foolish exercise. What is known is that stocks that have gone parabolic are subject to significant downdrafts after they have passed their peak.
Chart courtesy of StockCharts.com www.stockcharts.com
Notes used for Tech Talk’s interview on BNN Television
Yesterday
On January 16th I appeared on BNN Television with great fear and trepidation. At the time, North American equity markets were moving sharply lower and investor sentiment was negative. BNN Television asked for top three recommendations. Three investment ideas that benefit from favourable seasonal influences were selected. They were iShares on the TSX 60 Index, the Claymore Oil Sands ETF and iShares on the TSX Energy Index.. Since the close on January 16th, iShares on the TSX Energy Index have gained 17%, the Claymore Oil Sands ETF has improved 30% and iShares on the TSX Energy Index have advanced 36%. What should investors who followed these investment ideas do now?
Chart courtesy of
StockCharts.com www.stockcharts.com
Chart courtesy of
StockCharts.com www.stockcharts.com
Chart courtesy of
StockCharts.com www.stockcharts.com
Profit taking is recommended at current or higher prices in the month of May on the Claymore Oil Sands ETF and iShares on the TSX Energy Index. Reasons are based on technical and seasonal factors:
Canadian energy stock prices have a history of reaching a seasonal peak from mid May to early June. The following chart shows seasonal (December to May) entry and exit points during the three years.
Also, crude oil prices
have a history of reaching a seasonal peak in mid May.
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Technical analysis is
showing early warning signs of a peak in
Chart courtesy of
StockCharts.com www.stockcharts.com
iShares on the TSX 60 Index also are short term overbought, but have yet to show technical signs of reaching an intermediate peak. They can be held for now until they show technical signs of rolling over.
Following is a link to the BNN Television
interview:
http://watch.bnn.ca/#clip53959
Iain Fraser’s Column
In a way, the current charge in the
XEG was started by the natural gas chart shown in our report in mid-Feb of this
year. This chart, and comments, indicated an upside breakout going through
$8.50; the chart expectation was, and is, for a move to $13 per Mcf. But now much higher prices are considered a
possibility, and even a probability. With crude oil at $129 per barrel the
historical equivalent is $20.64 per Mcf. The
Americans want to be free from dependence on foreign oil by 2020. For the
moment, ethanol from corn is leading the charge, but this charge is a bit of a
joke and almost fiction. The facts are that the cost of producing ethanol is
about the same as the selling price. It is far better to produce ethanol from
sugar cane; which is very difficult to grow in the northern parts of the
We are pleased to offer you a 3 issue free trial (no obligation). Just send us an email and we will do the rest.
Chart courtesy of StockCharts.com www.stockcharts.com
Chart courtesy of StockCharts.com www.stockcharts.com
Editor’s Note: Iain’s services are available at www.fraser-ratings.com. Iain can be contacted at fraserratings@yahoo.ca.
Interesting Charts
Strongest sector yesterday on the
Several analysts have commented recently on the gold/crude oil ratio. The ratio currently is at one of the lowest levels in the past eighteen years implying either that gold is undervalued or crude oil is overvalued at current levels. Most comments by analysts implied that gold was undervalued. Tech Talk believes that it’s a bit of both.
Chart courtesy of StockCharts.com www.stockcharts.com
Notice that both previous occasions when the ratio reached below 7.25 happened during the seasonally strong period for gold between July and October when gold moved strongly higher relative to the price of crude oil. Tech Talk’s read on this chart is that gold currently is forming a base building pattern prior to a typical period of seasonal strength this July/October.
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.