by Don Vialoux, Timing the Market
Pre-opening Comments for Tuesday September 2nd
U.S. equity index futures were higher this morning. S&P500 futures were up 2 point in pre-opening trade.
Family Dollar gained $0.47 to $80.30 after Dollar General raised its offer to purchase the company for $80 per share.
Autozone (AZO $538.90) is expected to open lower after JP Morgan downgraded the stock from Overweight to Neutral. Target is $590.
Freeport McMoran fell $0.17 to $36.20 after Morgan Stanley downgraded the stock from Overweight to Equal Weight.
Boeing dropped $1.29 to $125.51 after Buckingham Research downgraded the stock from Neutral to Underperform.
Cabot Oil and Gas, a “gassy” stock added $0.33 to $33.87 after Stifel Nicolaus upgraded the stock from Hold to Buy. Target is $38.
Staples added $0.77 to $12.45 after Credit Suisse upgraded the stock from Market Perform to Outperform.
EquityClock.com’s Daily Market Comment
Following is a link:
http://www.equityclock.com/2014/09/01/stock-market-outlook-for-september-2-2014/
Economic News
August ISM to be released at 10:00 AM EDT on Tuesday is expected to slip to 57.0 from 57.1 in July.
July Construction Spending to be released at 10:00 AM EDT on Tuesday is expected to increase 1.0% versus a decline of 1.8% in June.
Canadian Bank Rate to be announced at 10:00 AM EDT on Wednesday is expected to remain unchanged at 1.00%
July Factory Orders to be released at 10:00 AM EDT on Wednesday are expected to increase 11.0% versus a gain of 1.1% in June (Thanks to large orders received by Boeing for aircraft).
Beige Book is scheduled to be released at 2:00 PM EDT on Wednesday
Bank of England Bank Rate to be released at 7:00 AM EDT on Thursday is expected to remain unchanged at 0.50%.
European Central Bank Rate to be released at 7:00 AM EDT on Thursday is expected to remain unchanged at 0.15%. European Central Bank Press Conference at 8:30 AM EDT is expected to disclose plans for further monetary easing.
August ADP Employment to be released at 8:15 AM EDT on Thursday is expected to increase to 220,000 from 218,000 in July.
Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 300,000 from 298,000 last week.
July U.S. Trade Deficit to be released at 8:30 AM EDT on Thursday is expected to increase to $42.0 billion from $41.5 billion in June.
Revised Second Quarter Productivity to be released at 8:30 AM EDT on Thursday us expected to increase to 2.6% from an initial 2.5% estimate
July Canadian Merchandise Trade Balance to be released at 8:30 AM EDT on Thursday is expected to show a surplus of $900 million versus a surplus of $1.9 billion in June
August Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to increase to 220,000 from 209,000 in July. Private Non-farm Payrolls are expected to increase to 200,000 from 198,000 in July. August Unemployment Rate is expected to slip to 6.1% from 6.2% in July. August Hourly Earnings are expected to improve 0.2% versus no change in July.
August Canada Employment is expected to show a gain of 10,000 versus a 41,700 increase in July. August Canada Unemployment Rate is expected to remain unchanged at 7.0% versus 7.0% in July.
Earnings Reports This Week
Wednesday: Navistar, Toll Brothers
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 14.97 points (0.75%) 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 72.00% from 64.00%. Percent remains intermediate overbought, but continues to trend higher.
Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 84.40% from 82.60%. Percent remains intermediate overbought, but has yet to show signs of peaking.
Bullish Percent Index for S&P 500 stocks increased last week to 75.80% from 74.00% and remained above its 15 day moving average. The Index remains intermediate overbought.
Bullish Percent Index for TSX stocks slipped last week to 81.56% from 82.38% and remained above its 15 day moving average. The Index remains intermediate overbought.
The TSX Composite Index gained 90.18 points (0.58%) 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 based on these technical indicators remains at 2.0 out of 3.0. Short term momentum indicators are trending up, but are overbought and showing early signs of rolling over.
Percent of TSX stocks trading above their 50 day moving average fell last week to 60.49% from 61.73%. Percent remains intermediate overbought and trending down.
Percent of TSX stocks trading above their 200 day moving average was unchanged last week at 76.13%. Percent remains intermediate overbought.
The Dow Jones Industrial Average gained 97.23 points (0.57%) last week. Intermediate trend changed to up from down when the Average moved above 17,151.56 to reach an all-time high. The Average remains above their 20 day moving average. Strength relative to the S&P 500 Index remains neutral. Technical score improved to 2.5 from 1.5 out of 3.0. Short term momentum indicators are trending up but are overbought.
Bullish Percent Index for Dow Jones Industrial Average stocks remained unchanged last week at 83.33%, but moved below its 15 day moving average. The Index remains intermediate overbought and trending down.
Bullish Percent Index for NASDAQ Composite stocks increased last week to 57.76% from 56.84% and remained above its 15 day moving average. The Index remains intermediate overbought.
The NASDAQ Composite Index gained 41.72 points (0.92%) 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 trending up, but are overbought.
The Russell 2000 Index gained 14.01 points (1.21%) 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, but are overbought and showing early signs of rolling over.
The Dow Jones Transportation Average dropped 21.89 points (0.26%) last week. Intermediate trend remains neutral. The Average remains above its 20 day moving average. Strength relative to the S&P 500 Index changed from neutral to negative. Technical score slipped to 1.5 from 2.0 out of 3.0. Short term momentum indicators have rolled over from an overbought level and have started to trend down.
The Australia All Ordinaries Composite Index slipped 15.97 points (0.28%) 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 negative from neutral. Technical score slipped to 2.0 from 2.5 out of 3.0. Short term momentum indicators are rolling over from overbought levels and have started to trend down.
The Nikkei Average lost 114.60 points (0.74%) last week. Intermediate trend remains down. The Average remains above its 20 day moving average. Strength relative to the S&P 500 Index changed to negative from neutral. Technical score slipped to 1.0 from 1.5 out of 3.0. Short term momentum indicators have rolled over from overbought levels and are trending down.
Europe 350 iShares added $0.45 (0.69%) last week. Intermediate trend remains down. Units remained above 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 up.
The Shanghai Composite Index lost 23.61 points (1.05%) 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 negative from neutral. Technical score dropped to 1.0 from 2.5 out of 3.0. Short term momentum indicators are trending down.
iShares Emerging Markets added $0.31 (0.69%) 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 up, but are overbought and showing early signs of rolling over.
Currencies
The U.S. Dollar Index added 0.33 (0.40%) last week. Intermediate trend remains up. The Index remains in an intermediate uptrend and continues to trade above its 20 day moving average. Short term momentum indicators are trend up, but are overbought.
The Euro dropped another 1.06 (0.80%) 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 added US 0.53 cents (0.58%) last week. Intermediate trend remains neutral. The Canuck Buck moved above its 20 day moving average. Short term momentum indicators are trending up.
The Japanese Yen dropped 0.15 (0.16%) last week. Intermediate trend remains neutral. The Yen remains below its 20 day moving average. Short term momentum indicators are trending down, but are oversold.
Commodities
The CRB Index added 4.08 points (1.41%) last week. Intermediate trend remains down. The Index 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.
Gasoline added $0.03 per gallon (1.16%) last week. Intermediate trend remains down. Gasoline 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 added $2.47 per barrel (2.65%) 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 up.
Natural Gas added $0.24 per MBtu (6.25%) last week. Intermediate trend changed to up from down on a move above $4.02. Gas moved above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from neutral. Technical score improved to 3.0 from 0.5. Short term momentum indicators are trending up.
The S&P Energy Index added 11.66 points (1.66%) last week. Intermediate trend remains down. The Index 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.
The Philadelphia Oil Services Index gained 8.15 points (2.84%) last week. Intermediate trend changed to neutral from down on a move above 292.11. The Index moved above their 20 day moving average. Strength relative to the S&P 500 Index changed to positive from negative. Technical score improved to 2.5 from 0.0 out of 3.0. Short term momentum indicators are trending up.
Gold added $6.20 per ounce (0.48%) 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 oversold and showing early signs of recovery.
Silver added $0.11 per ounce (0.57%) last week. Intermediate trend remains up. Silver remains below its 20 day moving average. Strength relative to the S&P 500 Index and Gold changed from negative to neutral. Technical score improved to 1.5 from 1.0 out of 3.0. Short term momentum indicators are recovering from oversold levels.
The AMEX Gold Bug Index added 7.42 points (3.12%) last week. Intermediate trend remains up. The Index moved above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from neutral. Technical score improved to 3.0 out of 3.0. Short term momentum indicators are trending up.
Platinum gained $2.40 per ounce (0.17%) last week. Intermediate trend remains neutral. $PLAT remains below its 20 day MA. Strength relative to the S&P and Gold remains negative.
Palladium gained$17.90 per ounce (2.01%) 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 fell $0.07 per lb. (2.19%) last week. Intermediate trend remains down. Copper moved 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.
The TSX Metals & Mining Index fell 10.67 points (1.20%) 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.
Lumber fell $5.70 (1.62%) last week. Intermediate trend remains up. Lumber fell below its 20 day moving average. Strength relative to the S&P 500 Index changed from positive to negative.
The Grain ETN fell another $0.49 (1.27%) 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 added $0.28 (0.52%) last week. Intermediate trend remains down. The ETF remains above 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 mixed.
Interest Rates
The yield on 10 Treasuries fell 6 basis points (2.50%) last week. Intermediate trend remains down. Yield remains below its 20 day moving average. Short term momentum indicators are trending down, but are oversold.
Conversely, price of the long term Treasury ETF added $1.76 (1.50%) last week. Trend remains up. Price remains above its 20 day moving average.
Other Issues
The VIX Index added 0.51 (4.45%) last week. Intermediate trend remains up. The Index remains below its 20 day moving average.
Economic focus this week is on the European Central Bank. Investors widely are anticipating a new monetary stimulus program. The other focus is on the U.S. August employment report on Friday. Most economic reports are expected to confirm that growth in the U.S. is happening slowly by surely.
Earning reports released this week are not a significant influence on equity markets.
Short and intermediate technical indicators are overbought and showing early signs of peaking.
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 and NASDAQ Composite Index based on data available for the past 63 years and is the worst performing month of the year for the TSX Composite Index based on data available for the past 29 years. Best performing sectors during the past 22 years are Telecom, Health Care and Energy. Worst performing sectors are Materials, Consumer Discretionary and Information Technology. Best performing subsectors are Gold, Silver and Biotech. Worst performing subsectors are Steel, Semiconductors and Chemicals.
Economic sensitive sectors including Steel, Chemicals, Industrials, Transportation and Materials are entering the month of September underperforming the S&P 500 Index. Not good news for the bulls!
International events (e.g. Ukraine, Palestine, Pakistan, Iraq and Libya) will continue to elevate volatility.
Late last week, more individual S&P 500 and TSX stocks broke support than broke resistance, a technical sign that momentum by North American has peaked or is near an intermediate peak.
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
S5TRAN Index Relative to the S&P 500 |
S5TRAN Index Relative to the Sector |
FP Trading Desk Headline
FP Trading Desk Headline reads, “Investors should prepare for greater turbulence”. Following is a link:
http://business.financialpost.com/2014/08/28/investors-should-prepare-for-greater-turbulence/
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
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 29th 2014
Copyright © Don Vialoux, Jon Vialoux, Brooke Thackray
