by Don Vialoux, Timing the Market
(Editor’s Note: Canada’s celebrates a holiday
on Monday. Next report is Tuesday May
20th)
Interesting Charts
Equity indices around the world recorded technical
deterioration yesterday. Weakness started in selected European
markets and their related ETFs
Weakness in North American equity markets quickly appeared in
early trading despite the release of favourable economic news
(i.e. Empire State Manufacturing Index, Philadelphia Fed
Manufacturing Index). The S&P 500 Index, Dow Jones
Industrial Average and TSX Composite Index closed below their
20 day moving average. Short term momentum indicators for all
three indices (i.e. Stochastics, RSI, MACD) are trending down.
The S&P 500 Index briefly moved below its 50 day moving
average, but managed to close above that level. The Dow Jones
Industrial Average closed below its level recorded on December
31st 2013.
A close by the S&P 500 Index below its 20 day moving
average is the classic technical signal for the end of the
period of seasonal strength averaging from October
28th to May 5th.
Yesterday, Mark Leibovit released a tutorial on SPY that offers
additional information on the short term sell signal on the
S&P 500 Index:
‘Tis the season for rotation from economically sensitive
sectors to defensive sectors! Following is a chart developed by
InvesTech Research that explains:
Not surprising, five primary sectors also fell below their 20
day moving average as indicated in the Weekly Technical Review
on SPDRs.
Most economically sensitive sectors and many international
equity markets have negative seasonality on a real and relative
basis starting at this time of year and continuing until
October. Pair trades and shorts are possible during the May to
October period.
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Technical Activity in Individual Equities
Yesterday
Technical action by S&P 500 equities was bearish yesterday.
Two S&P 500 stock broke resistance (Cisco and Kinder
Morgan) and 17 stocks broke support. Notable among stocks
breaking support were Wal-Mart and Bristol-Myers.
Highlights by TSX 60 stocks were Telus (upside breakout to an
all-time high) and ManuLife (downside breakdown).
Weekly Technical Review of Select Sector
SPDRs
Technology
· Intermediate trend changed from neutral to up on a move above
$36.93 (Score: 1.0)
· Units remain above their 20 day moving average (Score: 1.0)
· Strength relative to the S&P 500 Index changed from
neutral to positive (Score: 1.0)
· Technical score based on the above indicators improved from
2.0 to 3.0
· Short term momentum indicators are mixed.
Materials
· Intermediate trend changed from neutral to up on a move above
$48.34.
· Units remain above their 20 day moving average.
· Strength relative to the S&P 500 Index remains positive.
· Technical score improved to 3.0 from 2.5 out of 3.0
· Short term momentum indicators are overbought and showing
signs of rolling over.
Industrials
· Intermediate trend changed from neutral to up on a move above
$53.49
· Units remain above their 20 day moving average
· Strength relative to the S&P 500 Index improved from
neutral to positive
· Technical score improved to 3.0 from 2.0 out of 3.0
· Short term momentum indicators are rolling over from
overbought levels.
Consumer Discretionary
· Intermediate trend remains up
· Units fell below their 20 day moving average
· Strength relative to the S&P 500 Index remains negative
· Technical score remains at 1.0 out of 3.0
· Short term momentum indicators are trending down.
Financials
· Intermediate trend remains neutral
· Units fell below their 20 day moving average
· Strength relative to the S&P 500 Index changed from
neutral to negative
· Technical score fell to 0.5 from 2.0 out of 3.0.
· Short term momentum indicators are trending down
Energy
· Intermediate trend remains up
· Units fell below its 20 day moving average
· Strength relative to the S&P 500 Index changed from
positive to neutral.
· Technical score fell to 1.5 from 3.0 out of 3.0.
· Short term momentum indicators are trending down.
Consumer Staples
· Intermediate trend remains up.
· Units fell below their 20 day moving average
· Strength relative to the S&P 500 Index changed from
positive to neutral
· Technical score fell to 1.5 from 3.0 out of 3.0
· Short term momentum indicators have rolled over from
overbought levels.
Health Care
· Intermediate trend remains down
· Units remain above their 20 day moving average
· Strength relative to the S&P 500 Index remains neutral
· Technical score remains at 1.5 out of 3.0.
· Short term momentum indicators are mixed
Utilities
· Intermediate trend remains up.
· Units fell below their 20 day moving average.
· Strength relative to the S&P 500 Index changed from
neutral to negative
· Technical score fell to 1.0 from 2.5 out of 3.0
· Short term momentum indicators are trending down.
Summary of Weekly Seasonal/Technical Parameters for
SPDRs
Key:
Seasonal: Positive, Negative or Neutral on a relative
basis applying EquityClock.com charts
Trend: Up, Down or Neutral
Strength relative to the S&P 500 Index: Positive,
Negative or Neutral
Momentum based on an average of Stochastics, RSI and
MACD: Up, Down or Mixed
Twenty Day Moving Average: Above, Below
Horizons Simulated Trading Competition Using
ETFs
Horizons launches its simulated trading competition using ETFs
on May 20th. Everyone is welcome. Cost to
participants is zero. Should be fun! Cash prize is $13,000.
Following is a link giving more details and a connection to
register:
http://thebiggestwinner.stocktrak.com/home.aspx
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/
Following is an example:
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 Investment 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 Investment Management (Canada)
Inc.
Twitter comments (Tweets) are not offered on
individual equities held personally or in HAC.
Horizons Seasonal Rotation ETF HAC May
15th 2014
Copyright © Don Vialoux, Jon Vialoux, Brooke Thackray
