Vialoux's Technical Talk – February 9, 2015

by Don Vialoux, EquityClock.com

Pre-opening Comments for Monday February 9th

U.S. equity index futures were lower this morning. S&P 500 futures were down 9 points in pre-opening trade mainly due to international concerns in Greece and Ukraine.

Fourth quarter reports continue to pour in. Companies that reported this morning included Loews, Blackrock and Hasbro

The Canadian Dollar gained slightly following release of January Canadian Housing Starts. Consensus was an increase to 184,000 from 180,300 in December. Actual was 187,300

Apple slipped $0.18 to $118.75 despite a target price increase to $145 by Canaccord.

McDonalds dropped $0.74 to $93.25 after announcing a 1.8% decline in January Same Store Sales

Alcoa slipped $0.38 to $16.19 after JP Morgan downgraded the stock to Neutral.

Abercrombie & Fitch (ANF $25.78) is expected to open lower after Wunderlich downgraded the stock to Sell and reduced its target to #17

Mosaic added $0.75 to $50.45 after Morgan Stanley upgraded the stock to Overweight from Equal Weight. Target is $56.

Pfizer was unchanged at $33.17 after BMO Capital upgraded the stock to Outperform.

Valeant Pharmaceutical (VRX $161.99) is expected to open higher after Barclays initiated coverage with an Outperform rating

CAE (CAE $15.58 Cdn.) is expected to open lower after National Bank Financial downgraded the stock to Sector Perform.

EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2015/02/08/stock-market-outlook-for-february-9-2015/

Note comments on rotation from defensive sectors to economic sensitive sectors.

Economic News This Week

January Canadian Housing Starts to be released at 8:15 AM EST on Monday is expected to increase to 184,000 from 180,300 in December.

December Wholesale Inventories to be released at 10:00 AM EST on Tuesday are expected to increase 0.1% versus a gain of 0.8% in November

January Retail Sales to be released at 8:30 AM EST on Thursday are expected to fall 0.4% versus a decline of 0.9% in December. Excluding Auto Sales, January Retail Sales are expected to drop 0.4% versus a decline of 1.0% in December.

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 290,000 from 278,000 last week.

February Michigan Consumer Sentiment Index to be released at 10:00 AM EST on Friday are expected to remain unchanged from January at 98.1.

Earnings News This Week

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The Bottom Line

Investor sentiment began to change significantly last week after the peak of the fourth quarter report season was reached. Equity prices moved higher, bond yields spiked while bond and utility sector prices were hit hard. Funds are coming out of interest sensitive securities and are moving into economic sensitive equities (including the banks) and commodities. Currency trends continue to have a significant impact on equity prices. An intermediate peak in the U.S. Dollar is bullish for U.S. equity prices. The stage is set for a volatile, but positive move by North American equity prices into this summer with a focus on economic sensitive sectors.

Equity Trends

Daily Seasonal/Technical Equity Trends for February 6th

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Green: Increase from the previous day

Red: Decrease from the previous day

The S&P 500 Index gained 60.48 points (3.03%) last week. Intermediate trend remains up. The Index moved above its 20 day moving average. Short term momentum indicators are trending up.

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Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 62.60% from 35.80%. Percent has returned to an intermediate overbought level, but has yet to show signs of peaking.

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Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 71.40% from 62.60%. Percent remains intermediate overbought.

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Bullish Percent Index for S&P 500 stocks increased last week to 68.20% from 62.00%, but remained below its 20 day moving average. Percent remains intermediate overbought and trending down.

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Bullish Percent Index for TSX stocks increased last week to 58.95% from 50.20% and remained above its 20 day moving average. The Index continues to trend up, is intermediate overbought, but has yet to show signs of peaking.

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The TSX Composite Index gained 410.44 points (2.80%) last week. Intermediate uptrend was confirmed on Friday when the Index briefly moved above 15,184.36 (Score: 1.0). The Index remains above its 20 day moving average (Score: 1.0). Strength relative to the S&P 500 Index remains positive (Score: 1.0). Technical score remains at 3.0 out of 3.0. Short term momentum indicators are trending up, but are overbought.

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Percent of TSX stocks trading above their 50 day moving average increased last week to 71.60% from 51.60%. Percent remains in an intermediate uptrend and intermediate overbought, but has yet to show signs of peaking.

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Percent of TSX stocks trading above their 200 day moving average increased last week to 45.60% from 42.80%. Percent remains intermediate overbought.

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The Dow Jones Industrial Average gained 659.34 points (3.82%) last week. Intermediate trend remains neutral. The Average moved above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from neutral. Technical score increased to 2.5 from 1.0 out of 3.0. Short term momentum indicators are trending up, but are overbought

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Bullish Percent Index for Dow Jones Industrial Average stocks increased last week to 63.33% from 52.82% and recovered to its 20 day moving average.

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Bullish Percent Index for NASDAQ Composite stocks increased last week to 53.59% and moved above its 20 day moving average. The Index remains slightly overbought.

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The NASDAQ Composite Index gained 109.16 points (2.36%) last week. Intermediate trend remains up. The Index moved above its 20 day moving average. Strength relative to the S&P 500 Index remains positive. Short term momentum indicators are trending up and are overbought.

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The Russell 2000 Index added 44.35 points (2.36%) last week. Intermediate trend remains up. The Index moved above its 20 day moving average. Strength relative to the S&P 500 Index remains positive. Technical score improved to 3.0 from 2.0 out of 3.0. Short term momentum indicators are trending up.

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The Dow Jones Transportation Average added 283.15 points (3.29%) last week. Intermediate trend changed to neutral from positive on a move below 8580.81. The Average moved above its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score improved to 1.5 from 1.0 out of 3.0. Short term momentum indicators are trending up.

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The Australia All Ordinaries Composite Index added 283.15 points (3.27%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index remains positive. Technical score remains at 3.0 out of 3.0. Short term momentum indicators are trending up and are overbought, but have yet to show signs of peaking.

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The Nikkei Average dropped 25.89 points (0.15%) last week. Intermediate trend remains up. The Average remains above its 20 day moving average. Strength relative to the S&P 500 Index changed to neutral from positive. Technical score remains at 2.5 out of 3.0. Short term momentum indicators are mixed.

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iShares Europe 350 units added $0.73 (1.71%) last week. Intermediate trend changed to neutral from down on a move above $43.72. Units remain above their 20 day moving average. Strength relative to the S&P 500 Index remains positive. Technical score improved to 2.5 from 2.0 out of 3.0. Short term momentum indicators are trending up, but are overbought.

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The Shanghai Composite Index dropped 134.45 points (4.19%) last week. Intermediate trend changed on Friday to down from up on a move below 3,095.07. The Index remains below its 20 day moving average. Strength relative to the S&P 500 Index changed to negative from neutral. Technical score fell to 0.0 from 1.5 out of 3.0. Short term momentum indicators are trending down.

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iShares Emerging Markets added $0.80 (2.05%) last week. Intermediate trend remains up. Units remain below their 20 day moving average. Strength relative to the S&P 500 Index changed to negative from neutral. Technical score slipped to 1.0 from 1.5 out of 3.0. Short term momentum indicators are mixed.

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Currencies

The U.S. Dollar Index slipped 0.20 (0.21%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators are trending down.

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The Euro added 0.29 (0.26%) last week. Intermediate trend remains down. The Euro remains below its 20 day moving average. Short term momentum indicators are trending up.

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The Canadian Dollar added US 1.27 cents (1.62%) last week. Intermediate trend remains down. The Canuck Buck remains below its 20 day moving average. Short term momentum indicators are trending up.

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The Japanese Yen lost 1.20 (1.41%) last week. Intermediate trend remains down. The Yen fell below its 20 day moving average on Friday. Short term momentum indicators are trending down.

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Commodities

Daily Seasonal/Technical Commodities Trends for February 6th

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The CRB Index gained 6.01 points (2.75%) last week. Intermediate trend remains down. The Index moved above its 20 day moving average. Strength relative to the S&P 500 Index remains neutral. Technical score improved to 1.5 from 0.5 out of 3.0. Short term momentum indicators are trending up.

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Gasoline added $0.09 per gallon (6.08%) last week. Intermediate trend remains up. Gas remains above its 20 day moving average. Strength relative to the S&P 500 Index remains positive. Technical score remains at 3.0 out of 3.0. Shor term momentum indicators are trending up.

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Crude Oil gained $4.10 per barrel (8.50%) last week. Intermediate trend changed to neutral from down on a move above $51.27. Crude remains above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from neutral. Technical score increased to 2.5 from 1.5 out of 3.0. Short term momentum indicators are trending up.

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Natural Gas fell another $0.12 per MBtu (4.46%) last week. Intermediate trend remains down. “Natty” remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score remains at 0.0 out of 3.0. Short term momentum indicators are mixed.

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The S&P Energy Index added 30.03 points (5.38%) last week. Intermediate trend remains down. The Index moved above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from neutral. Technical score improved to 2.0 from 0.5 out of 3.0. Short term momentum indicators are trending up.

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The Philadelphia Oil Services Index gained 15.62 points (8.34%) last week. Intermediate trend remains down. The Index moved above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from negative. Technical score improved to 2.0 from 0.0 out of 3.0. Short term momentum indicators are trending up.

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Gold fell $45.90 per ounce (3.59%) last week. Intermediate trend remains up. Gold fell below its 20 day moving average. Strength relative to the S&P 500 Index changed to negative from positive. Technical score fell to 1.0 from 3.0. Short term momentum indicators are trending down.

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Silver dropped $0.49 per ounce (2.85%) last week. Intermediate trend remains up. Silver remains below its 20 day moving average. Strength relative to the S&P 500 Index changed to negative from neutral. Technical score dropped to 1.0. Short term momentum indicators are trending down. Strength relative to Gold changed to negative from neutral.

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The AMEX Gold Bug dropped 8.96 points (4.44%) last week. Intermediate trend remains up. The Index fell below its 20 day moving average on Friday. Strength relative to the S&P 500 Index changed to negative from positive. Technical score dropped to 1.0 from 3.0. Short term momentum indicators are trending down. Strength relative to Gold changed to neutral from positive.

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Platinum fell $18.20 per ounce (1.47%) last week. Intermediate trend remains up. PLAT remains below its 20 day MA. Strength relative to S&P 500: Negative. Relative to Gold: neutral.

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Palladium added $12.65 per ounce (1.64%) last week. Intermediate trend remains down. PALL moved above its 20 day moving average. Strength relative to the S&P 500 Index remains neutral. Technical score improved to 1.5 out of 3.0. Momentum: Up. Relative to gold: positive.

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Copper added $0.10 per lb. (4.02%) last week. Intermediate trend remains down. Copper moved above its 20 day moving average. Strength relative to the S&P 500 Index changed to neutral from negative. Technical score improved to 1.5 from 0.0 out of 3.0. Short term momentum indicators are trending up.

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The TSX Metals & Mining Index jumped 56.04 points (9.22%) last week. Intermediate trend changed to up from down on a move above 637.71. The Index moved above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from neutral. Technical score increased to 3.0 from 0.5 out of 3.0. Short term momentum indicators are trending up.

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Lumber dropped $6.50 (2.02%) last week. Intermediate trend remains down. Lumber moved above its 20 day MA. Strength relative to the S&P 500 Index: neutral. Technical score: 1.5.

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The Grain ETN added $1.75 (3.56%) last week. Trend remains neutral. Units remain below their 20 day moving average. Strength relative to the S&P 500 Index changed to neutral from negative. Technical score improved to 1.0 from 0.5. Short term momentum indicators: Uptrend

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The Agriculture ETF added $0.87 (1.64%) last week. Intermediate trend remains up. Units remain above their 20 day moving average. Strength relative to the S&P 500 Index changed to neutral from positive. Technical score slipped to 2.5 from 3.0 out of 3.0. Short term momentum indicators are trending up.

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Interest Rates

The yield on 10 year Treasuries jumped 26.3 basis points (15.70%) last week. Intermediate trend remains down. Yield moved above its 20 day moving average. Short term momentum indicators are trending up.

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Conversely, price of the long term Treasury ETF plunged $7.32 (5.29%) last week. Intermediate trend remains up. Price fell below its 20 day moving average.

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Other Issues

The VIX Index dropped 3.68 (17.55%) last week. Intermediate trend remains up. The Index fell below its 20 day moving average.

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Economic news this week is relatively quiet. Focus is on the Retail Sales report on Thursday.

Peak of the U.S. fourth quarter report season has passed. Responses remain mixed, but slightly more encouraging last week. Investors were skeptical about guidance that came with results due to impact of the strong U.S. Dollar. Earnings on a year-over-year basis were up about 6%. Canadian reports peak this week. A focus is on gold company reports. They should be brutal.

Short term technical indicators for most markets and sectors are trending up, but are overbought. However, signs of a peak have yet to surface.

Intermediate technical indicators recovered from oversold levels and have yet to show signs of peaking.

International uncertainties remain high. Focuses are on Ukraine and Greece. The Euro group meets on Wednesday to discuss bridge financing for Greece.

Seasonal influences for North American equity markets turn positive in late February, particularly during U.S. President Pre-election years.

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Daily Seasonal/Technical Sector Trends for February 6th

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Special Free Services available through www.equityclock.com

Equityclock.com is offering free access to a data base showing seasonal studies on individual stocks and sectors. The data base holds seasonality studies on over 1000 big and moderate cap securities and indices. To login, simply go to http://www.equityclock.com/charts/

Below is an example:

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StockTwits released on Friday

Technical action by S&P 500 stocks to 10:15: Bullish. 21 S&P 500 stocks broke resistance. 2 broke support.

S&P breakouts were dominated by financials: $ACE, $AON, $BAC, $BLK, $CME, $GS, $ICE, $JPM, $KEY, $MS, $NTRS, $RF, $WFC.

Technicals on Individual Equities on Friday

After 10:15 AM, another 9 S&P 500 stocks broke resistance. However, in late trading on Friday, 8 S&P utility stocks broke support (as did the S&P Utilities Index). More evidence that the U.S. interest rates have passed their intermediate bottom!

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Among TSX 60 stocks, Power Corp broke resistance.

Interesting Seasonality Charts

EquityClock noted on Friday that U.S. Treasury prices have a history of moving lower at this time of year. History is repeating this year!

EquityClock also noted on Friday that commodity prices have a history of moving higher at this time of year. History is repeating this year!

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Disclaimer: Comments, charts and opinions offered in this report by www.timingthemarket.ca and 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. Don and Jon Vialoux are Research Analysts with Horizons ETFs Management (Canada) Inc. All of the views expressed herein are the personal views of the authors and are not necessarily the views of Horizons ETFs Management (Canada) Inc., although any of the recommendations found herein may be reflected in positions or transactions in the various client portfolios managed by Horizons ETFs Management (Canada) Inc.

Individual equities mentioned in StockTwits are not held personally or in HAC.

Horizons Seasonal Rotation ETF HAC February 6th 2015

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