Upcoming US Events for Today:
- Consumer Price Index for March will be released at 8:30am. The market expects no change (0.0%) on a month-over-month basis versus an increase of 0.7% previous. Less Food and Energy, the CPI is expected to increase by 0.2%, consistent with the previous report.
- Housing Starts for March will be released at 8:30am. The market expects 930K versus 917K previous. Housing Permits are expected to decline to 942K versus 946K previous.
- Industrial Production for March will be released at 9:15am. The market expects a month-over-month increase of 0.2% versus an increase of 0.7% previous. Capacity Utilization is expected to decline to 78.3% from 79.6% previous.
Upcoming International Events for Today:
- Great Britain CPI for March will be released at 4:30am EST. The market expects a year-over-year increase of 2.8%, consistent with the previous report. PPI Output is expected to show a year-over-year increase of 2.0% versus an increase of 2.3% previous.
- Euro-Zone CPI for March will be released at 5:00am EST. The market expects a year-over-year increase of 1.7% versus an increase of 1.8% previous.
- German Economic Sentiment for April will be released at 5:00am EST. The market expects 42 versus 48.5 previous. Current Conditions are expected to decline to 12.2 from 13.6 previous.
- Canadian Manufacturing Sales for February will be released at 8:30am. The market expects a month-over-month increase of 0.6% versus a decline of 0.2% previous.
Recap of Yesterday’s Economic Events:
| Event | Actual | Forecast | Previous |
| JPY Industrial Production (YoY) | -10.50% | -11.00% | |
| JPY Capacity Utilization (MoM) | 0.70% | 1.70% | |
| JPY Industrial Production (MoM) | 0.60% | -0.10% | |
| JPY Machine Tool Orders (YoY) | -21.50% | -21.60% | |
| EUR Euro-Zone Trade Balance s.a. (euros) | 12.0B | 10.0B | 8.7B |
| EUR Euro-Zone Trade Balance (euros) | 10.4B | 5.0B | -4.7B |
| USD Empire Manufacturing | 3.05 | 7 | 9.24 |
| USD Net Long-term TIC Flows | -$17.8B | $40.0B | $25.7B |
| CAD Existing Home Sales (MoM) | 2.40% | -2.10% | |
| USD Total Net TIC Flows | $53.6B | $116.8B | |
| USD NAHB Housing Market Index | 42 | 45 | 44 |
The Markets
Equity markets sold off in a panic on Monday, deflated by a sell-off in the commodity markets that saw Gold fall by almost 9% and Silver by over 12%, almost double the losses realized on Friday. Investors in the commodity market were forced to raise cash to cover margin calls and redemptions by selling equities, a trend that could continue in the days to come. The volatility in equity markets was exacerbated by news of explosions at the Boston Marathon, the result of which pushed stocks to the lows of the session in what amounted to the largest decline for the S&P 500 since November 7th of last year. The large cap index is now sitting precisely on the rising trendline that stretches back to November of last year. A break of trend would likely imply escalated selling pressures as the period of seasonal strength for equity markets reaches an end.
Yesterday we highlighted a head-and-shoulders topping pattern on the chart of Oil, the breakdown of which followed through into Monday’s session. Similar bearish head-and-shoulders patterns are now becoming evident on the charts of equity sectors and benchmarks, including the Energy Sector ETF, Materials Sector ETF, the Russell 2000 Small Cap Index, and the Dow Jones Transportation Average. The Industrial Sector ETF has charted similarly bearish double-top with downside potential just as great as some of the other head-and-shoulder setups. Five economically sensitive, cyclical areas of the equity market are showing significant bearish setups, which are foretelling declines of greater than 5% from present levels. Each has shown significant underperformance compared to the market for at least the past couple of weeks, emphasizing the risk aversion amongst investors at this transitionary point for equity markets. When these key cyclical areas of the market show weakness, broad market equity weakness is certain to follow. The period of seasonal strength for cyclical assets, such as these, concludes around May 5th, on average, but clearly “sell” signals have been triggered sooner than typical.
Seasonal charts of companies scheduled to report earnings today:
Sentiment on Monday, as gauged by the put-call ratio, ended bearish at 1.09.
S&P 500 Index
Chart Courtesy of StockCharts.com
TSE Composite
Chart Courtesy of StockCharts.com
Horizons Seasonal Rotation ETF (TSX:HAC)
- Closing Market Value: $13.27 (down 1.63%)
- Closing NAV/Unit: $13.24 (down 2.07%)
Performance*
| 2013 Year-to-Date | Since Inception (Nov 19, 2009) | |
| HAC.TO | 4.12% | 32.4% |
* performance calculated on Closing NAV/Unit as provided by custodian
Click Here to learn more about the proprietary, seasonal rotation investment strategy developed by research analysts Don Vialoux, Brooke Thackray, and Jon Vialoux.
