by Don Vialoux, Timing the Market
Editor’s Note: Jon Vialoux is scheduled to appear on BNN’s Market Call Tonight this evening at 6:00 PM EDT.
Pre-opening Comments for Monday September 15th
U.S. equity index futures were lower this morning. S&P 500 futures were down 2 points in pre-opening trade.
Index futures were virtually unchanged following release of the September Empire Manufacturing Index at 8:30 AM EDT. Consensus was an increase to 16.0 from 14.7 in August. Actual was 27.54.
Citigroup launched coverage of the U.S. discount retailer sector. Costco (COST $125.37) was initiated with a Buy rating. Wal-Mart (WMT $75.91) and Target (TGT $62.53) were initiated with Neutral ratings.
Symantec slipped $0.46 to $24.07 after RBC Capital downgraded the stock from Outperform to Sector Perform.
Economic News This Week
September Empire Manufacturing Index to be released at 8:30 AM EDT on Monday are expected to increase to 16.0 from 14.7 in August.
August Industrial Production to be released at 9:15 AM EDT on Monday is expected to be increase 0.3% versus a gain of 0.4% in July. August Capacity Utilization is expected to increase to 79.3 from 79.2 in July.
August Producer Prices to be released at 8:30 AM EDT on Tuesday are expected to be unchanged versus a gain of 0.1% in July. Excluding food and energy, August PPI is expected to increase 0.1% versus a gain of 0.2% in July.
August Consumer Prices to be released at 8:30 AM EDT on Wednesday are expected to remain unchanged versus a gain of 0.1% in July. Excluding food and energy, August CPI is expected to increase 0.2% versus a gain of 0.1% in July.
Results of the FOMC meeting are to be released at 2:00 PM EDT on Wednesday. Another $10 billion reduction in asset purchases is expected.
Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to fall to 305,000 from 315,000 last week.
August Housing Starts to be released at 8:30 AM EDT on Thursday are expected to slip to 1,045,000 from 1,093,000 in July
September Philadelphia Fed to be released at 10:00 AM EDT on Thursday is expected to fall to 23.5 from 28.0 in August.
Canadian Consumer Prices to be released at 8:30 AM EDT on Friday are expected to be unchanged versus a decline of 0.2% in July.
August Leading Economic Indicators to be released at 10:00 AM EDT on Friday is expected to increase 0.4% versus a gain of 0.9% in July.
Earnings Reports This Week
Tuesday: Adobe
Wednesday: FedEx, General Mills, Lennar
Thursday: Oracle
Summary of Weekly Seasonal/Technical Parameters for Equity Indices/ETFs
![clip_image002[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2014/09/clip_image00252.png "clip_image002[5]")
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 fell 22.17 points (1.10%) last week. Intermediate trend remains up. The Index fell below its 20 day moving average. Short term momentum indicators are trending down.
Percent of S&P 500 stocks trading above their 50 day moving average plunged to 55.40% from 73.40%. Percent is intermediate overbought and trending down.
Percent of S&P 500 stocks trading above their 200 day moving average dropped to 77.40% from 84.80%. Percent is intermediate overbought and trending down.
Bullish Percent Index for S&P 500 stocks fell last week to 74.80% from75.40%, but remained above its 20 day moving average. The Index remains intermediate overbought and has started to trend down.
Bullish Percent Index dropped to 78.28% from 80.33% and remained below its 20 day moving average. The Index remains intermediate overbought and trending down.
The TSX Composite Index slipped 38.34 points (0.25%) last week. Intermediate trend remains up (Score: 1.0). The Index fell below its 20 day moving average (Score 0.0). Strength relative to the S&P 500 Index changed to neutral from negative (Score: 0.5). Technical score slipped to 1.5 from 2.0.Short term momentum indicators are trending down
Percent of TSX stocks trading above their 50 day moving average dropped last week to 44.86% from 51.44%. Percent continues to trend down.
Percent of TSX stocks trading above their 200 day moving average dropped last week to 69.14% from 71.60%. Percent remains intermediate overbought and trending down.
The Dow Jones Industrial Average dropped 149.85 points (0.87%) last week. Intermediate trend remains up. The Average fell below its 20 day moving average. Strength relative to the S&P 500 Index remains neutral. Technical score dropped to 1.5 from 2.5 out of 3.0.
Bullish Percent Index for Dow Jones Industrial Average slipped last week to 83.33% from 86.67% and fell below its 20 day moving average. The Index remains intermediate overbought and starting to roll over.
Bullish Percent Index for NASDAQ Composite stocks was virtually unchanged last week at 58.34% and remained above its 20 day moving average. The Index remains intermediate overbought.
The NASDAQ Composite Index fell 15.30 points (0.33%) 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 down.
The Russell 2000 Index dropped 9.76 points (0.83%) last week. Intermediate trend remains down. The Index fell below its 20 day moving average. Strength relative to the S&P 500 Index remains neutral. Technical score fell to 0.5 from 1.5 out of 3.0. Short term momentum indicators are trending down.
The Dow Jones Transportation Average lost 49.52 points (0.58%) 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 trending down.
The Australia All Ordinaries Composite Index fell 66.60 points (1.19%) last week. Intermediate trend remains up. The Index moved below its 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.
The Nikkei Average gained 279.61 points (1.78%) last week. Intermediate trend remains up. The Average remains above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from neutral. Technical score increased to 3.0 from 2.5 out of 3.0. Short term momentum indicators are trending up, but are overbought.
Europe 350 iShares fell $0.70 (1.49%) last week. Intermediate trend remains down. Units fell below their 20 day moving average. Strength relative to the S&P 500 Index remains neutral. Technical score fell to 0.5 from 1.5 out of 3.0. Short term momentum indicators are trending down.
The Shanghai Composite Index added 5.52 points (0.24%) 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 and showing early signs of rolling over.
iShares Emerging Markets plunged $2.06 (4.50%) last week. Intermediate trend remains up. Units fell below their 20 day moving average. Strength relative to the S&P 500 Index changed to negative from neutral. Technical score fell to 1.0 from 2.5 out of 3.0. Short term momentum indicators are trending down.
Currencies
The U.S. Dollar Index gained another 0.45 (0.54%) 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 surprisingly also gained last week, up 0.03 (0.02%) last week. Intermediate trend remains down. The Euro remains below its 20 day moving average. Short term momentum indicators are oversold and showing early signs of bottoming.
The Canadian Dollar dropped US 1.71 cents (1.86%) last week. Intermediate trend changed to down from neutral on a move below 91.02. The Canuck Buck fell below its 20 day moving average. Short term momentum indicators are trending down, but are oversold.
The Japanese Yen fell another 2.03 (2.13%) last week. Intermediate trend remains down. The Yen remains below its 20 day moving average. Short term momentum indicator are trending down, but are deeply oversold.
Commodities
The CRB Index dropped another 1.73 points (2.33%) 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.
Gasoline fell another $0.06 per gallon (2.33%) 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 dropped another $1.02 per barrel (1.09%) 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 oversold and showing early signs of recovery.
Natural Gas added $0.07 per MBtu (1.85%) last week. Intermediate trend remains up. ”Natty remains below 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 mixed.
The S&P Energy Index fell 26.31 points (3.73%) last week. Intermediate downtrend was confirmed on a move below 688.47. 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 down, but are oversold.
The Philadelphia Oil Services Index dropped 7.88 points (2.73%) last week. Intermediate trend changed to down from neutral on a move below 281.92. The Index remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score fell to 0.0 from 0.5 out of 3.0. Short term momentum indicators are trending down and are oversold.
Gold dropped $35.80 per ounce (2.82%) last week. Intermediate trend changed to down from neutral on a move below $1,240.20 per ounce. Gold 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.
Silver dropped $0.55 per ounce (2.87%) last week. Intermediate trend changed to down from up on a move below $18.615. Silver remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score dropped to 0.0 from 1.0 out of 3.0. Short term momentum indicators are trending down, but are oversold. Strength relative to Gold remains neutral.
The AMEX Gold Bug Index dropped another 9.06 points (3.97%) 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, but are oversold.
Platinum plunged $40.50 per ounce (2.87%) last week. Intermediate trend changed to down from neutral on a move below $1,387.30. PLAT remains below its 20 day moving average
Palladium dropped $55.40 per ounce (4.21%) last week. Trend changed to neutral from up on a move below $837.50 per ounce. PALL moved below its 20 day moving average. Strength relative to the S&P 500 Index and Gold changed to negative from positive.
Copper lost $0.05 per lb. (1.58%) last week. Intermediate downtrend was confirmed on a move below $3.082. Copper remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score dropped to 0.0 from 1.0 out of 3.0. Short term momentum indicators are trending down, but are oversold.
The TSX Metals & Mining Index added 3.00 points (0.34%) last week. Intermediate trend remains down. The Index remains below its 20 day moving average. Strength relative to the S&P 500 Index changed from negative to neutral. Technical score improved to 0.5 from 0.0 out of 3.0. Short term momentum indicators are oversold and showing early signs of bottoming.
Lumber added $4.50 (1.36%) 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 dropped another $1.95 (5.27%) 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 lost $0.78 (1.44%) last week. Intermediate trend remains down. Units remain 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.
Interest Rates
The yield on 10 year Treasuries increased 15.3 basis points (5.27%) last week. Intermediate trend remains up. Yield remains above its 20 day moving average. Short term momentum indicators are trending up, but are overbought.
Conversely, price of the long term Treasury ETF fell $2.35 (2.03%) last week. Trend remains up. Yield remains below its 20 day moving average.
Other Issues
The VIX Index spiked 1.22 (10.09%) last week. Intermediate trend remains up. The Index moved above its 20 day moving average.
Technical action last week indicates that North American equity indices have entered into at least a short term corrective phase (a spike in VIX, drop in percent of S&P 500 and TSX stocks trading above their 50 day moving average, a fall in Bullish Percent Indices, more S&P 500 and TSX 60 stocks breaking support than breaking resistance, indices falling below their 20 day moving average, short term momentum indicators trending down.
September is the weakest month of the year for North American equity markets and the last two weeks of September is the weakest period in the month of September. Recent technical action by North American equity markets suggests that history is about to repeat.
Economic focus this week is on the FOMC meeting on Wednesday. Will the Fed indicate the possibility of an earlier than expected withdrawal of monetary stimulus?
Other economic data released this week is expected to be mixed at best. Month-over-month data is becoming more difficult to remain positive because previous monthly reports in most cases came in higher than expected.
Earnings reports are unlikely to have a significant impact on equity markets. However, watch for downward revision of third quarter revenues and earnings due to recent strength in the U.S. Dollar. Tech Talk will provide additional information on third quarter earnings estimates next week.
International events (Ukraine, Palestine, Pakistan, Iraq and Libya) are a fading focus for equity markets, but can flare up. A new focus is the referendum for separation by Scotland.
The Bottom Line
Continuing caution for equity markets is recommended. A healthy weight in cash and cash equivalents makes sense between now and at least the end of September.
StockTwits on Friday @equityclock
Technical weakness by U.S. indices continues. $SPY and $DIA fell below their 20 day Moving Averages.
Editor’s Note: Following is a comment on DIA released by Mark Leibovit over the weekend:
Technical action to 10:30 AM remains bearish. Three stocks broke resistance and six stocks broke support.
REITs and related ETFs ($IYR) are notably weaker. Negative seasonal influences are early this week.
More REITs breaking support: $EQR, $PSA, $VNO.
Technical Action by Individual Equities on Friday
By the close on Friday, four S&P 500 stocks had broken resistance and 13 stocks had broken support.
No TSX 60 stocks broke resistance or support.
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
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 12th 2014
Copyright © Don Vialoux, Jon Vialoux, Brooke Thackray
