by Don Vialoux, Timing the Market
Economic News This Week
July New Home Sales to be released at 10:00 AM EDT on Monday are expected to increase to 415,000 from 406,000 in June.
July Durable Goods Orders to be released at 8:30 AM EDT on Tuesday are expected to increase 7.0% from a gain of 1.7% in June. Excluding Transportation July Durable Goods Orders are expected to increase 1.9% from a gain of 0.6% in June.
June Case/Shiller 20 City Home Price Index to be released at 9:00 AM EDT on Tuesday is expected to increase 8.3% versus a gain of 9.3% in May.
August Consumer Confidence to be released at 10:00 AM EDT on Tuesday is expected to slip to 88.3 from 90.9 in May.
Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 302,000 from 298,000 last week.
Second estimate of second quarter GDP to be released at 8:30 AM EDT on Thursday is expected to show a gain of 4.0% versus a gain of 4.0% in the first estimate.
Canadian June GDP to be released at 8:30 AM EDT on Friday is expected to increase 0.2% versus a gain of 0.4% in May.
July Personal Income to be released at 8:30 AM EDT on Friday is expected to increase 0.3% versus a gain of 0.4% in June. July Personal Spending is expected to increase 0.1% versus a gain of 0.4% in June.
August Chicago PMI to be released at 9:45 AM EDT on Friday is expected to increase to 54.8 from 52.6 in July
August Michigan Sentiment is expected to increase to 80.0 from 79.2 in July.
Earning News This Week
Tuesday: Analog Devices, Bank of Montreal, Bank of Nova Scotia, National Bank
Thursday: Commerce Bank, Canadian Western Bank, Laurentian Bank, Toronto Dominion.
Mr. Vialoux on BNN on Friday
Following is a link showing the top three picks:
http://www.bnn.ca/Video/player.aspx?vid=422963
Equity Trends
Summary of Weekly Seasonal/Technical Parameters for Equity Indices/ETFs
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
Green: Upgrade or higher
Red: Downgrade or lower
The S&P 500 Index gained 33.34 points (1.71%) last week. Intermediate trend changed to up from down on a move above 1991.39 to an all-time high. The Index remains above its 20 day moving average. Short term momentum indicators are trending up and are overbought.
Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 64.00% from 46.80%. Percent is intermediate overbought, but has yet to show signs of peaking
Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 82.60% from 74.40%. Percent remains intermediate overbought, but has yet to show signs of peaking.
Bullish Percent Index for S&P 500 stocks increased last week to 74.00% from 71.20% and moved above its 15 day moving average. The Index remains intermediate overbought.
Bullish Percent Index for TSX Composite stocks increased last week to 82.38% from 80.74% and moved above its 15 day moving average. The Index remains intermediate overbought.
The TSX Composite Index added 231.34 points (1.51%) last week. Intermediate uptrend was confirmed on a move above 15,527.30 to an all-time high (Score: 1.0). The Index moved above its 20 day moving average (Score: 1.0). Strength relative to the S&P 500 Index changed to negative from neutral (Technical score: 0.0). Technical score based on the above indicators improved to 2.0 from 1.5 out of 3.0. Short term momentum indicators are trending up and are overbought.
Percent of TSX stocks trading above their 50 day moving average increased last week to 61.73% from 53.09%. Percent remains intermediate overbought.
Percent of TSX stocks trading above their 200 day moving average increased last week to 76.13% from 74.49%. Percent remains intermediate overbought.
The Dow Jones Industrial Average gained 338.31 points (2.03%) last week. Intermediate trend remains down. The Average 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 and are overbought.
Bullish Percent Index for Dow Jones Industrial Average stocks was unchanged last week at 83.33% and moved above its 15 day moving average. The Index remains intermediate overbought.
Bullish Percent Index for NASDAQ Composite stocks increased last week to 56.84% from 55.28% and moved above its 15 day moving average. The Index remains intermediate overbought.
The NASDAQ Composite Index added 73.62 points (1.65%) last week. Intermediate trend changed to up from down on a move above 4,485.92. The Index remains 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 and are overbought.
The Russell 2000 Index gained 18.69 points (1.64%) last week. Intermediate trend remains down. The Index remains above its 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 trending up and are overbought.
The Dow Jones Transportation Average gained 165.79 points (2.01%) last week. Intermediate trend remains neutral. The Average remains above its 20 day moving average. Strength relative to the S&P 500 Index remains neutral. Technical score remains at 2.0 out of 3.0. Short term momentum indicators are trending up and are overbought.
The Australia All Ordinaries Composite Index gained 80.93 points (1.46%) last week. Intermediate uptrend was confirmed on a move above 5,633.30. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index remains neutral. Technical score remains at 2.5 out of 3.0. Short term momentum indicators are trending up and are overbought.
The Nikkei Average gained 220.85 points (1.44%) last week. Intermediate trend remains down. The Average 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 and overbought.
Europe 350 iShares increased $0.27 (0.59%) last week. Intermediate trend remains down. Units moved above their 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score improved to 1.0 from 0.0 out of 3.0. Short term momentum indicators are trending up.
The Shanghai Composite Index gained 14.08 points (0.63%) last week. Intermediate trend remains up. The Index remains above its 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 overbought and showing early signs of rolling over.
iShares Emerging Markets added $0.24 (0.54%) last week. Intermediate uptrend was confirmed on a move above $45.13. Units remain above their 20 day moving average. Strength relative to the S&P 500 Index changed to negative from neutral. Technical score slipped to 2.0 from 2.5 out of 3.0. Short term momentum indicators are trending up.
Currencies
The U.S. Dollar Index gained 0.93 (1.14%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Sort term momentum indicators are trending up and are overbought.
The Euro dropped 1.57 (1.17%) last week. Intermediate trend remains down. The Euro remains below its 20 day moving average. Short term momentum indicators are trending down and are oversold.
The Canadian Dollar fell US 0.40 cents (0.44%) last week. Intermediate trend remains neutral. The Canuck Buck remains below its 20 day moving average. Short term momentum indicators are oversold.
The Japanese Yen dropped 1.47 (1.50%) last week. Intermediate trend remains neutral. The Yen remains below its 20 day moving average. Short term momentum indicators are trending down and oversold.
Commodities
The CRB Index dropped another 1.26 points (0.43%) last week. Intermediate trend remains down. The Index remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative.
Gasoline dropped another $0.11 per gallon (4.07%) last week. Intermediate trend remains down. Gasoline remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative.
Crude Oil plunged another $3.87 per barrel (3.98%) last week. Intermediate trend remains down. Crude 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 trending down and are oversold.
Natural Gas added $0.05 per MBtu (1.32%) last week. Intermediate trend remains down. Crude remains below its 20 day moving average. Strength relative to the S&P 500 Index changed to neutral from negative. Short term momentum indicators are oversold and trending up.
The S&P Energy Index gained 3.91 points (0.56%) last week. Intermediate trend remains down. The Index 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 trending up.
The Philadelphia Oil Services Index added 2.62 points (0.92%) last week. Intermediate trend remains down. The Index 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 trending up.
Gold lost $23.70 per ounce (1.82%) last week. Intermediate trend changed to down from up on a move below $1,281.00. Gold moved 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 2.5 out of 3.0. Short term momentum indicators are trending down.
Silver dropped another $0.15 per ounce (0.76%) last week. Intermediate trend remains up. Silver remains below its 20 day moving average. Strength relative to the S&P 500 Index and Gold remains negative. Technical score remains at 1.0 out of 3.0. Short term momentum indicators are trending down and oversold.
The AMEX Gold Bug Index fell 7.55 points (3.07%) last week. Intermediate trend remains up. The Index fell below its 20 day moving average. Strength relative to the S&P 500 Index changed to neutral from positive. Technical score dropped to 1.5 from 3.0 out of 3.0. Short term momentum indicators are trending down.
Platinum dropped $36.70 per ounce (2.52%) last week. Intermediate trend changed to neutral from up on a move below $1,421.40. Strength relative to the S&P 500 and Gold is negative.
Palladium slipped $5.75 per ounce (0.64%) last week. Intermediate trend remains up. PALL remains above its 20 day moving average. Strength relative to the S&P 500 Index and Gold remains positive.
Copper added $0.09 per lb. (2.89%) last week. Intermediate trend remains up. Copper moved above 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 trending up.
The TSX Metals & Mining Index added 5.59 points (0.63%) last week. Intermediate trend remains neutral. The Index remains below their 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score remains at 0.5 out of 3.0. Short term momentum indicators are trending down.
Lumber added $4.50 (1.30%) last week. Trend remains up. Lumber remains above its 20 day moving average. Strength relative to the S&P 500 Index remains positive.
The Grain ETN slipped $0.33 (0.85%) last week. Trend remains down. Units remain below their 20 day moving average. Strength relative to the S&P 500 Index changed to negative from neutral
The Agriculture ETF added $0.17 (0.32%) last week. Intermediate trend remains down. Units remain below their 20 day moving average. Strength relative to the S&P 500 Index changed to negative from neutral. Short term momentum indicators are trending up.
Interest Rates
The yield on 10 year Treasuries added 5.8 basis points (2.47%) last week. Trend remains down. Yield remains below its 20 day moving average. Short term momentum indicators are mixed.
Conversely, price of the long term Treasury ETF slipped $0.42 (0.36%) last week. Trend remains up. Price remains above their 20 day moving average.
Other Issues
The VIX Index dropped 1.68 (12.78%) last week. Intermediate trend remains up. The Index fell below its 20 day moving average.
Economic news this week is expected to show slow, but steady GDP growth in the U.S.
Earnings focus this week is on Canadian banks.
Short and intermediate technical indicators for markets and most sectors are overbought, but have yet to show signs of rolling over.
Seasonal influences between now and the end of September for equity markets and most sectors is negative, particularly during mid-term U.S. election years. Exceptions exist including gold, health care, uranium, agriculture and “gassy” sectors.
International events (e.g. Ukraine, Palestine, Pakistan and Libya) will continue to elevate volatility.
The Bottom Line
Caution for equity market investing is recommended despite apparent upside momentum. A healthy weight in cash and cash equivalents makes sense between now and the end of September.
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
Monitored Technical/Seasonal Trade Ideas
A security must have a Technical Score of 1.5 – 3.0 to be on this list.
Green: Increased Technical Score
Red: Reduced Technical Score
FP Trading Desk Headline
FP Trading Desk headline reads, “LEI data shows U.S. economy no longer warrants extreme accommodation”. Following is a link:
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 August 22nd 2014
Copyright © Don Vialoux, Jon Vialoux, Brooke Thackray
