by Don Vialoux, Timing the Market
Economic News This Week
July Wholesale Inventories to be released at 10:00 AM EDT on Wednesday are expected to increase 0.5% versus a gain of 0.3% in June.
Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to slip to 300,000 from 302,000 last week.
August Retail Sales to be released at 8:30 AM EDT on Friday are expected to increase 0.6% versus no change in July. Excluding auto sales, August Retail Sales are expected to increase 0.3% versus a gain of 0.1% in July.
September Michigan Sentiment to be released at 9:55 AM EDT on Friday is expected to increase to 83.5 from 82.5 in August
July Business Inventories to be released at 10:00 AM EDT on Friday are expected to increase 0.4% versus a gain of 0.4% in June.
Earnings News This Week
Monday: Campbell Soup
Thursday: Kroger, Lululemon
Friday: Darden Restaurants
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 added 4.34 points (0.22%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators are trending up, but are overbought and showing early signs of rolling over.
Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 73.40% from 72.00%. Percent remains intermediate overbought, but continues to trend up.
Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 84.80% from 84.00%. Percent is intermediate overbought, but continues to trend higher.
Bullish Percent Index slipped last week to 75.40% from 75.80% and remained above its 20 day moving average. The Index remains intermediate overbought.
Bullish Percent Index for TSX Composite stocks fell last week to 80.33% from 81.59% and fell below its 20 day moving average. The Index remains intermediate overbought and trending down.
Editor’s note: A 20 day moving average was applied instead of a 15 day moving average in order to normalize our technical indicators that use a 20 day moving average
The TSX Composite Index slipped 55.81 points (0.36%) last week. Intermediate trend remains up (Score: 1.0). The Index remains above its 20 day moving average (Score: 1.0). Strength relative to the S&P 500 Index remains negative (Score: 0.0). Technical score remained at 2.0 out of 3.0. Short term momentum indicators are rolling over from overbought levels and are trending down.
Percent of TSX stocks trading above their 50 day moving average plunged last week to 51.44% from 60.49%. Percent is overbought and trending down.
Percent of TSX stocks trading above their 200 day moving average fell last week to 71.60% from 76.13%. Percent is overbought and trending down.
The Dow Jones Industrial Average added 38.91 points (0.23%) last week. Intermediate trend remains up. The Average 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, but are overbought and showing early signs of rolling over.
Bullish Percent Index for Dow Jones Industrial Average stocks increased last week to 86.67% from 83.33% and moved above its 20 day moving average. The Index remains intermediate overbought.
Bullish Percent Index for NASDAQ Composite stocks increased last week to 58.36% from 57.75% and remained above its 20 day moving average. The Index remains intermediate overbought.
The NASDAQ Composite Index added 2.63 points (0.06%) 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 remained at 3.0 out of 3.0. Short term momentum indicators have rolled over from overbought levels and are trending down.
The Russell 2000 Index slipped 3.98 points (0.34%) 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. Short term momentum indicators have rolled over from overbought levels and are trending down.
The Dow Jones Transportation Average gained 193.78 points (2.30%) last week. Intermediate trend changed to up from neutral on a move above 8,515.04. The Average remains above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from negative. Technical score improved to 3.0 from 1.5 out of 3.0. Short term momentum indicators are trending up, but are overbought.
The Australia All Ordinaries Composite Index fell 25.67 points (0.46%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score remains at 2.0 out of 3.0. Short term momentum indicators have rolled over from overbought levels and are trending down.
The Nikkei Average gained 244.09 points (1.58%) last week. Intermediate trend changed to up from down on a move above 15,796.66. The Average remains above its 20 day moving average. Strength relative to the S&P 500 Index improved to neutral from negative. Technical score improved to 2.5 from 1.0 out of 3.0. Short term momentum indicators are trending up, but are overbought.
Europe 350 iShares added $0.26 (0.56%) last week. Intermediate trend is down. Units remain above their 20 day moving average. Strength relative to the S&P 500 Index changed to neutral from negative. Technical score improved to 1.5 from 1.0 out of 3.0. Short term momentum indicators are trending up, but are overbought.
The Shanghai Composite Index jumped 109.23 points (4.93%) 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 positive from negative. Technical score improved to 3.0 from 1.0 out of 3.0. Short term momentum indicators are trending up, but are overbought.
iShares Emerging Markets added $0.79 (1.75%) 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 negative. Technical score improved to 2.5 from 2.0 out of 3.0. Short term momentum indicators are trending up, but are overbought
Currencies
The U.S. Dollar jumped 1.07 (1.29%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators are trending up, but are overbought.
The Euro plunged 1.85 (1.41%) last week. Intermediate trend remains down. The Euro remains below its 20 day moving average. Short term momentum indicators are trending down, but are oversold.
The Canadian Dollar eased US $0.02 (0.02%) last week. Intermediate trend remains neutral. The Canuck Buck remains above its 20 day moving average. Short term momentum indicators are trending up.
The Japanese Yen fell 0.91 (0.95%) last week. Intermediate trend changed to down from neutral on a move below 96.05. The Yen remains below its 20 day moving average. Short term momentum indicators are trending down but are oversold.
Commodities
The CRB Index dropped 4.12 points (1.41%) last week. Intermediate trend remains down. The Index fell below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score slipped to 0.0 from 1.0 out of 3.0.
Gasoline fell $0.04 per gallon (1.53%) last week. Intermediate trend remains down. Gas 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.
Crude Oil fell $2.55 per barrel (2.66%) 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 recovering from oversold levels.
Natural Gas lost $0.29 per MBtu (7.11%) last week. Intermediate trend remains up. “Natty” fell below its 20 day moving average. Strength relative to the S&P 500 Index changed to neutral from positive. Technical score fell to 1.5 from 3.0 out of 3.0. Short term momentum indicators are trending down.
The S&P Energy Index fell 11.08 points (1.55%) last week. Intermediate trend remains down. The Index fell 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.
The Philadelphia Oil Services Index fell 7.11 points (2.41%) last week. Intermediate trend remains neutral. The Index fell below its 20 day moving average. Strength relative to the S&P 500 Index changed to negative from positive. Technical score dropped to 0.5 from 2.5 out of 3.0. Short term momentum indicators are trending down.
Gold dropped $20.70 per ounce (1.61%) last week. Intermediate trend remains down. Gold 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, but are oversold.
Silver dropped $0.35 per ounce (1.80%) last week. Intermediate trend remains up. Silver remains below its 20 day moving average. Strength relative to the S&P 500 remains negative. Technical score fell to 1.0 from 1.5 out of 3.0. Short term momentum indicators are trending down, but are oversold. Strength relative to Gold is neutral.
The AMEX Gold Bug Index plunged 17.49 points (7.12%) last week. Intermediate trend changed to neutral from up on a move below 231.34. The Index fell below its 20 day moving average. Strength relative to the S&P 500 Index changed to negative from positive. Technical score dropped to 0.5 from 3.0 out of 3.0. Short term momentum indicators are trending down, but are oversold.
Platinum dropped $13.70 per ounce (0.96%) last week. Intermediate trend remains neutral. PLAT remains below its 20 day moving average. Strength relative to S&P remains negative.
Palladium dropped $14.95 per ounce (1.65%) last week. Intermediate trend remains up. PALL remains above its 20 day moving average. Strength relative to the S&P 500 and Gold remains positive.
Copper added $0.03 per lb. (0.96%) last week. Intermediate trend remains down. Copper moved above its 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 mixed.
The TSX Metals & Mining Index dropped $2.01 (0.23%) last week. Intermediate trend changed to down from neutral on a move below 876.60. The Index remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score dropped to 0.0 from 0.5 out of 3.0. Short term momentum indicators are trending down, but are oversold.
Lumber dropped $13.20 (3.82%) last week. Intermediate trend remains up. Lumber remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative.
The Grain ETN fell another $1.04 (2.74%) last week. Intermediate trend remains down. Units remain below their 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score remains at 0.0 out of 3.0.
The Agriculture ETF fell $0.26 (0.48%) last week. Intermediate trend remains down. Units fell below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score fell to 0.0 from 1.0 out of 3.0. Short term momentum indicators are trending down.
Interest Rates
The yield on 10 year Treasuries increased last week by 11.8 basis points (5.04%) last week. Intermediate trend changed from down to up on Friday on a move above 2.48%. Yield moved above its 20 day moving average. Short term momentum indicators are trending up.
Conversely, price of the long term Treasury ETF fell $3.32 (2.79%) last week. Trend remains up. Units fell below their 20 day moving average on Friday.
Other Issues
The VIX Index added 0.11 (0.92%) last week. Intermediate trend remains up. The Index remains below its 20 day moving average.
Earnings reports are not expected to have a significant influence on equity markets this week.
Economic focus is on retail sales to be released on Friday. Reports this week are expected to confirm slow but steady economic growth in the U.S.
Short and intermediate technical indicators are overbought and showing early signs of peaking. Notably weaker are economic sensitive sectors.
Seasonal influences in the month of September are negative. September is the worst performing month of the year for the S&P 500 Index, Dow Jones Industrial Average, TSX Composite Index and NASDAQ Composite Index. Weakest is most notable during Mid-term U.S. election years.
International events (Ukraine, Palestine, Pakistan, Iraq and Libya) have cooled slightly, but remain on the watch list, particularly following the pledge by NATO to deter events in Ukraine and Iraq.
The Bottom Line
Caution for equity market investing is recommended despite apparent upside momentum. Exceptions exist (e.g. gold, silver, biotech, “gassy” equities) 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
URA and DML were deleted after their technical score fell below 1.5
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, “2014 looks a lot like 1996”. Following is a link:
http://business.financialpost.com/2014/09/05/2014-looks-a-lot-like-1996/
StockTwits released on Friday
Quiet technical action by S&P 500 stocks to 11:00 AM. Two stocks broke resistance: $ALTR, $NU. Two energy stocks broke support: $EOG, ESV.
$OIH broke support at $52.85 and extended a downtrend.
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 September 5th 2014
Copyright © Don Vialoux, Jon Vialoux, Brooke Thackray
