by Don Vialoux, Timing the Market
Economic News This Week
June Empire Manufacturing Index to be released at 8:30 AM EDT on Monday is expected to slip to 15.0 from 19.0 in May.
May Industrial Production to be released at 9:15 AM EDT on Monday is expected to increase 0.5% versus a decline of 0.6% in April. May Capacity Utilization is expected to increase to 78.8 from 78.6 in April.
May Housing Starts to be released at 8:30 AM EDT on Tuesday are expected to slip to 1,033,000 units from 1,072,000 units in April
May Consumer Prices to be released at 8:30 AM EDT on Tuesday are expected to increase 0.2% versus a gain of 0.3% in April. Excluding food and energy, May CPI is expected to increase 0.2% versus a gain of 0.2% in April.
FOMC Rate Decision is expected to be announced at 2:00 PM EDT on Wednesday. The Fed is expected to reduce mortgage backed and Treasury bonds by another $10 billion per month
Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to slip to 315,000 from 317,000 last week
June Philly Fed Index to be released at 10:00 AM EDT on Thursday is expected to slip to 14.0 from 15.4 in May.
May Leading Economic Indicators to be released at 10:00 AM EDT on Thursday are expected to increase 0.6% versus a gain of 0.4% in April.
Canadian April Retail Sales to be released at 8:30 AM EDT on Friday are expected to increase 0.4% versus a decline of 0.1% in March
Canadian May Consumer Prices to be released at 8:30 AM EDT on Friday are expected to increase 0.2% versus a gain of 0.3% in April.
Earning News This Week
The S&P 500 Index fell 13.28 points (0.68%) last week. Trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators are trending down from overbought levels. They recorded classic short term sell signals when Stochastics fell below 80%, RSI fell below 70% and MACD recorded a negative crossover from an overbought (above 0.) level.
Percent of S&P 500 stocks trading above their 50 day moving average fell to 78.80% from 88.20%. Classic intermediate sell signal (i.e. start of an intermediate correction) is a drop below the 80% level.
Percent of S&P 500 stocks trading above their 200 day moving average fell last week to 86.60% from 87.60%. A rollover from above the 85% level also is an intermediate sell signal.
Bullish Percent Index for S&P 500 stocks increased last week to 82.40% from 80.60% and remained above its 15 day moving average. Percent remains intermediate overbought.
Bullish Percent Index for TSX stocks increased last week to 82.45% from 80.82% and returned to above its 15 day moving average. The Index remains intermediate overbought.
The TSX Composite Index added 162.71 points (1.10%) last week thanks to strength in gold and energy stocks. 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 changed from negative to positive (Score: 1.0). Technical score based on the above indicators improved to 3.0 from 2.0 out of 3.0. Short term momentum indicators are trending up, but are overbought.
Percent of TSX stocks trading above their 50 day moving average increased last week to 65.98% from 60.25%. Percent remains intermediate overbought.
Percent of TSX stocks trading above their 200 day moving average increased last week to 75.412% from 71.31%. Percent remains intermediate overbought.
The Dow Jones Industrial Average lost 148.54 points (0.88%) last week. Intermediate trend remains up. The Average 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 are trending lower from overbought levels.
Bullish Percent Index for Dow Jones Industrial Average stocks was unchanged last week at 86.67% and remained above its 15 day moving average. The Index remains intermediate overbought.
Bullish Percent Index for NASDAQ Composite stocks increased last week to 56.82% from 54.19% and remained above its 15 day moving average. The Index remains intermediate overbought.
The NASDAQ Composite Index slipped 10.75 points (0.25%) 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 overbought and have started to roll over.
The Russell 2000 Index eased 2.53 points (0.22%) last week. Intermediate trend remains neutral. The Index remains above their 20 day moving average. Strength relative to the S&P 500 Index remains positive. Technical score remains at 2.5 out of 3.0. Short term momentum indicators are overbought and have started to rollover.
The Dow Jones Transportation Average plunged 167.13 points (2.04%) last week. Intermediate trend remains up. The Average fell below its 20 day moving average. Strength relative to the S&P 500 Index changed from positive to negative. Technical score fell to 1.0 from 3.0 out of 3.0. Short term momentum indicators are trending down.
The Australia All Ordinaries Composite Index dropped 59.80 points (1.10%) last week. Intermediate trend remains neutral. The Index remains below its 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.
The Nikkei Average added 20.60 points (0.01%) last week. Intermediate trend remains up. The Average 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 rolling over from overbought levels.
Europe 350 iShares fell $0.53 (1.05%) last week. Intermediate trend remains up. Units remain above their 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 are trending down.
The Shanghai Composite Index added 40.75 points (2.01%) last week. Intermediate trend changed from neutral to up on a move above 2,061.06. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index changed from negative to neutral. Technical score improved to 2.5 from 0.5 out of 3.0. Short term momentum indicators are trending up, but are overbought.
iShares Emerging Markets added $0.05 (0.11%) last week. Trend remains up. Units remain above their 20 day moving average. Strength relative to the S&P 500 Index changed from negative to neutral. Technical score improved to 2.5 from 2.0 out of 3.0. Short term momentum indicators remain mixed.
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
Red: Downgrade
Currencies
The U.S. Dollar added 0.19 (0.24%) last week. Intermediate trend remains neutral. The Dollar remains above its 20 day moving average. Short term momentum indicators have rolled over from overbought levels.
The Euro dropped 0.96 (0.70%) last week. Intermediate trend remains neutral. The Euro remains below its 20 day moving average. Short term momentum indicators are oversold.
The Canadian Dollar added US 0.65 cents (0.71%) last week. Intermediate trend remains up. The Canuck Buck remains above its 20 day moving average. Short term momentum indicators are overbought.
The Japanese Yen added 0.51 (0.52%) last week. Intermediate trend remains down. The Yen recovered above its 20 day moving average. Short term momentum indicators are trending up.
Commodities
The CRB Index added 3.37 points (1.10%) last week. Intermediate trend remains down. The Index recovered above its 20 day moving average. Strength relative to the S&P 500 Index improved from negative to neutral. Technical score improved to 1.5 from 0.0 out of 3.0.
Gasoline gained $0.12 per gallon (4.08%) last week. Intermediate trend remains up. Gas remains above its 20 day moving average. Strength relative to the S&P 500 Index changed from negative to positive. Technical score improved to 3.0 from 2.0 out of 3.0.
Crude Oil gained $4.25 per barrel (4.14%) last week. Intermediate trend changed from neutral to positive on a move above $105.22. Crude remains above its 20 day moving average. Strength relative to the S&P 500 Index changed from negative to positive. Technical score improved to 3.0 from 1.5 out of 3.0. Short term momentum indicators are trending up, but are overbought.
Natural Gas added $0.03 per MBtu (0.64%) last week. Intermediate trend remains neutral. Gas remains above its 20 day moving average. Strength relative to the S&P 500 Index changed from neutral to positive. Technical score improved to 2.5 from 2.0 out of 3.0. Short term momentum indicators are mixed.
The S&P Energy Index added 11.70 points (1.66%) last week. Trend remains up. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index changed from negative to positive. Technical score changed to 3.0 from 2.0 out of 3.0. Short term momentum indicators are trending up, but are overbought.
The Philadelphia Oil Services Index gained 2.87 points (0.97%) last week. Intermediate trend changed from down to neutral on a move above 297.86. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index changed from neutral to positive. Technical score increased to 2.5 from 1.5 out of 3.0. Short term momentum indicators are trending up, but are overbought.
Gold gained $21.60 per ounce (1.72%) last week. Intermediate trend remains down. Gold moved above its 20 day moving average. Strength relative to the S&P 500 Index improved from negative to neutral. Technical score improved to 1.5 from 0.0 out of 3.0. Short term momentum indicators are trending up.
Silver gained $0.66 per ounce (3.48%) last week. Intermediate trend remains down. Silver moved above its 20 day moving average. Strength relative the S&P 500 Index changed from negative to positive. Technical score improved to 2.0 from 0.0 out of 3.0. Strength relative to Gold remains positive. Short term momentum indicators are trending up.
The AMEX Gold Bug Index gained 13.24 points (5.97%) last week. Intermediate trend remains down. The Index moved above its 20 day moving average. Strength relative to the S&P 500 Index changed from negative to positive. Technical score increased to 2.0 from 0.0 out of 3.0. Strength relative to Gold improved from neutral to positive. Short term momentum indicators are trending up.
Platinum fell $18.00 per ounce (1.24%) last week. Trend remains up. Platinum remains below its 20 day moving average. Strength relative to the S&P 500 remains negative. Technical score remains at 1.0 out of 3.0. Strength relative to Gold changed from positive to negative.
Palladium dropped $31.65 (3.75%) last week. Trend remains up. PALL fell below its 20 day MA. Strength relative to S&P 500 and Gold changed from positive to negative.
Copper slipped $0.02 per lb. (0.66%) last week. Intermediate trend remains up. Copper remains below its 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, but are oversold.
The TSX Metals and Mining Index fell 10.37 points (1.23%) last week. Intermediate trend remains up. The Index remains below its 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.
Lumber added $1.30 (0.42%) last week. Trend remains down. Lumber remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative.
The Grain ETN fell another $1.37 (2.91%) last week. Trend remains up. Units remain 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.
The Agriculture ETF fell $0.98 (1.77%) last week. Intermediate trend remains up. Units fell below their 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score fell to 1.0 from 2.0 out of 3.0. Short term momentum indicators are trending down.
Interest Rates
The yield on 10 year Treasuries added 0.7 basis points (0.27%) last week. Intermediate trend remains down. Yield remains above its 20 day moving average. Short term momentum indicators are trending up.
Conversely, price of the long term Treasury ETF added $0.56 (0.50%) last week. Intermediate trend remains up. Units remain below their 20 day moving average.
Other Issues
The VIX Index jumped 1.45 (13.51%) last week. Trend remains down. The Index moved above its 20 day moving average. The VIX has been a leading indicator for U.S. equity markets.
Economic focus this week is on the FOMC meeting on Wednesday. No change in policy is anticipated. Other economic data is expected to show a modest slowdown in growth relative to exceptional gains recorded in the previous month
Earnings reports are sparse this week. Focus is on FedEx on Wednesday.
Volumes on equity markets will remain lower than average. The World Cup is detracting from investment activity.
Short and intermediate technical indicators for most equity markets and sectors have rolled over from overbought levels and/or are trending lower.
Historically, the weakest two week period for U.S. equity markets are the third and fourth weeks in June. The period coincides with the “earnings confession” time slot when companies who are missing consensus revenues and earnings offer updated guidance.
International events will continue to impact equity markets, notably events in Iraq and Ukraine.
The Bottom Line
Equity markets have entered into a period of rising volatility and lower returns. Caution is recommended, particularly in economic sensitive sectors.
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:
Editor’s Note: Note the brief decline during the last two weeks in June followed by the recovery in the first two weeks in July.
StockTweet Released on Friday
First DJIA stock to establish a downtrend is $WMT. It also broke below its 200 day MA today.
Editor’s Note: Shortly after, another DJIA stock (Procter & Gamble) broke support and established 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 June 13th 2014
Copyright © Don Vialoux, Jon Vialoux, Brooke Thackray
