Vialoux's Technical Talk - Sept. 22, 2014

Economic News This Week

August Existing Home Sales to be released at 10:00 AM EDT on Monday are expected to increase to 5.2 million from 5.15 million units in July.

July Canadian Retail Sales to be released at 8:30 AM EDT on Tuesday are expected to increase 0.4% versus a gain of 1.1% in June.

August Net Home Sales to be released at 10:00 AM EDT on Wednesday are expected to increase to 435,000 units from 412,000 units in July.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 300,000 from 280,000 last week

August Durable Goods Orders to be released at 8:30 AM EDT on Thursday are expected to fall 16.3% from a gain of 22.6% in July. Excluding Transportation Orders are expected to increase 0.7% versus a decline of 0.7% in July.

Third estimate of second quarter GDP to be released at 8:30 AM EDT on Friday is expected to increase to 4.6% from the second estimate of 4.2%.

September Michigan Sentiment Index to be released at 9:55 AM EDT on Friday are expected to increase to 85.0 from 84.6 in August.

Earnings News This Week

Monday: Autozone

Tuesday: Bed, Bath & Beyond, Carnival

Wednesday: Jabil Circuits, KB Homes

Thursday: Micron, Nike

Friday: Blackberry

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 24.86 points (1.25%) last week. Intermediate trend remains up. The Index moved back above its 20 day moving average. Short term momentum indicators are trending up.

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 62.00% from 55.40%. Percent remains intermediate overbought and trending down.

Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 78.20% from 77.40%. Percent remains intermediate overbought and trending down.

Bullish Percent Index for S&P 500 stocks slipped last week to 73.60% from 74.80% and fell below its 20 day moving average. The Index remains intermediate overbought and trending down.

Bullish Percent Index for TSX Composite stocks dropped last week to 77.05% from 78.28% and remained below its 20 day moving average. The Index remains intermediate overbought and trending down.

The TSX Composite Index fell 265.18 points (1.71%) last week. Intermediate trend remains up (Score: 1.0). The Index remains below its 20 day moving average (Score: 0.0). Strength relative to the S&P 500 Index changed to negative from neutral (Score: 0.0). Technical score slipped to 1.0 from 1.5 out of 3.0. Short term momentum indicators are trending down.

Percent of TSX stocks trading above their 50 day moving average plunged last week to 36.63% from 44.86%. Percent continues to trend lower.

Percent of TSX stocks trading above their 200 day moving average dropped last week to 59.67% from 69.14%. Percent remains intermediate overbought and trending down.

The Dow Jones Industrial Average gained 292.23 points (1.72%) last week. Intermediate trend remains up. The Average moved back above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from neutral. Technical score increase to 3.0 from 1.5. Short term momentum indicators are trending up.

Bullish Percent Index for Dow Jones Industrial Average stocks was unchanged last week at 83.33% and remained below its 20 day moving. The Index remains intermediate overbought.

Bullish Percent Index for NASDAQ Composite stocks slipped last week to 56.51% from 58.34% and fell below its 20 day moving average. The Index remains intermediate overbought and trending down.

The NASDAQ Composite Index added 12.19 points (0.27%) last week. 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 mixed.

The Russell 2000 Index slipped 13.70 points (1.18%) 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 neutral to negative. Technical score dropped to 0.0 form 0.5 out of 3.0

The Dow Jones Transportation Average gained 81.55 points (0.95%) 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 up.

The Australia All Ordinaries Composite Index fell 95.00 points (1.72%) last week. Intermediate trend changed to neutral from up on a move below 5,419.70. The Index remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score slipped to 0.5 from 1.0 out of 3.0. Short term momentum indicators are trending down.

The Nikkei Average gained 372.88 points (2.34%) 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 up.

Europe 350 iShares added $0.21 (0.45%) 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. Technical score eased to 0.0 form 0.5 out of 3.0. Short term momentum indicators are starting to trend up.

The Shanghai Composite Index slipped 2.50 points (0.11%) last week. Intermediate trend remains up. The Index remains above its 20 day moving averages. 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.

iShares Emerging Markets slipped $0.33 (0.75%) last week. Intermediate 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. Short term momentum indicators are trending down.

Currencies

The U.S. Dollar Index gained another 0.62 (0.74%) last week. Intermediate trend remains up. The Index remains well above its 20 day moving average. Short term momentum indicators are trending up, but are overbought.

The Euro fell another 1.20 (0.93%) last week. Intermediate trend remains down. The Euro remains well below its 20 day moving average. Short term momentum indicators are trending down, but are deeply oversold.

The Canadian Dollar added US 1.73 cents (1.92%) last week. Intermediate trend remains down. The Canuck Buck remains below its 20 day moving average. Short term momentum indicators are trending up.

The Japanese Yen dropped another 1.35 (1.45%) last week. Intermediate trend remains down. The Yen remains below its 20 day moving average. Short term momentum indicators are trending down, but are deeply oversold.

Commodities

The CRB Index fell another 0.96 (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 remains negative. Technical score remains at 0.0 out of 3.0.

Gasoline added $0.01 per gallon (0.40%) last week. Intermediate trend remains down. Gas remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative.

Crude Oil fell $0.62 per barrel (0.67%) 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 slipped $0.02 (0.52%) 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 2.5 out of 3.0. Short term momentum indicators are mixed.

The S&P Energy Index added 6.49 points (0.96%) 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 dropped 3.77 points (1.34%) 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 down.

Gold dropped $14.90 per ounce (1.21%) 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 deeply oversold.

Silver dropped $0.77 per ounce (4.14%) last week. Intermediate trend remains down. Silver remains below its 20 day moving average. Strength relative to the S&P 500 Index and Gold remains negative. Technical score remains at 0.0 out of 3.0. Short term momentum indicators are trending down, but are deeply oversold.

The AMEX Gold Bug Index dropped another 10.50 points (4.79%) last week. Intermediate trend remains neutral. The Index remains below its 20 day moving average. Strength relative to the S&P 500 Index and Gold remains negative. Technical score remains at 0.5 out of 3.0. Short term momentum indicators are trending down, but are deeply oversold.

Platinum fell $33.20 per ounce (2.42%) last week. Intermediate trend remains down. PLAT remains below its 20 day moving average. Strength relative to Gold and S&P remains negative.

Palladium dropped $23.45 per ounce (2.80%) last week. Intermediate trend changed to down from neutral. PALL remains below its 20 day moving average. Strength relative to the S&P 500 Index and Gold remains negative.

Copper slipped $0.02 per lb. (0.64%) last week. Intermediate trend remains down. Copper 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.

The TSX Metals and Mining Index plunged 67.86 points (7.70%) last week. Intermediate trend remains down. The Index remains 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 0.5 out of 3.0. Short term momentum indicators are trending down, but are deeply oversold.

Lumber fell $7.60 (2.25%) last week. Intermediate trend changed to down from up on a move below $330.90. Lumber remains below its 20 day MA. Relative strength remains negative

The Grain ETN dropped another $1.23 (3.51%) last week. Intermediate trend remains down. Units remain below their 20 day moving average. Strength relative to the S&P 500 Index remains negative.

The Agriculture ETF added $0.43 (0.81%) last week. Intermediate trend remains down. Units remain below their 20 day moving average. Strength relative to the S&P 500 Index remains negative. Short term momentum indicators are trending up.

Interest Rates

Yield on 10 year Treasuries slipped 2.7 basis points (1.03%) 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 added $1.22 (1.08%) last week. Intermediate trend remains up. Price remains below its 20 day moving average.

Other Issues

The VIX Index fell 1.20 (8.02%) last week. Intermediate trend remains up. The Index moved below its 20 day moving average.

Strength in the U.S. Dollar (a flight to quality) continues to have a positive impact on U.S. equity prices. Focus has been on big cap U.S. stocks. Note the weakness in the Russell 2000 Index. Ultimately, strength in the U.S. Dollar has a negative influence on big cap U.S. equities because consolidated earnings from operations outside of the U.S. (particularly from Europe and Japan) are dampened by currency translation.

Technical action temporarily turned positive late last week when traders responded favourably to Janet Yellen’s comments. However, short term technical indicators returned to overbought levels.

Seasonal influences between mid-September and the first week in October are negative, particularly during mid-term election years.

Economic news this week is expected to confirm that the U.S. economy continues to grow at a slow, but steady rate. The exception will be the Durable Goods Orders report where month-over-month data will be negative. However, the data will be skewed by an extraordinary gain recorded in the previous month and should be ignored.

Quarterly earnings reports to be released this week are not expected to have a significant impact on North American equity markets. Watch out for surprising negative guidance by U.S. based international companies. ‘Tis the season for earnings warning prior to the third quarter earnings report season. Consensus third quarter earnings gains on a year-over-year basis by Dow Jones Industrial Average companies are expected to increase on average (median) by 4.4%. However, these estimates for the most part have not taken strength in the U.S. Dollar into account. In contrast, Canadian companies are expected to benefit from currency translation in the third quarter. The Canadian Dollar averaged US 96 cents in the third quarter last year. Not surprising, Canada’s top 60 companies are expected to record healthy year-over-year earnings gains, an average gain of 10.4% for TSX 60 companies.

Investors will watch for crucial PMI reports to be released on Tuesday. The Eurozone report is expected to record a slight decline. The China report is expected to record a decline and could test the 50 level.

International events (Ukraine, Palestine, Pakistan, Iraq, Syria, Libya) remain a fading focus for equity markets, but can flare up.

The Bottom Line

A continuing caution for North American equity markets is recommended. A healthy weight in cash and cash equivalents between now and at least the end of September makes sense.

StockTwits on Friday@equityclock

Technical action by S&P stocks to 10:30: Bullish 18 stocks broke resistance. Consumer Disc stocks prominent. One broke support ($ORCL).

The TSX Energy Index and related ETFs broke support and completed at head and shoulders pattern.

$CLO.CA completed a head and shoulders pattern on a break below $14.47.

The TSX 60 Index completed a short term head and shoulders pattern.

More Canadian Gold stocks break support: $K.CA, $YRI.CA, $NGD.CA, $NG.CA, $EGO.

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 headliner reads, “What you need to know about the Denver Gold Forum”. Following is a link:

http://business.financialpost.com/2014/09/19/what-you-need-to-know-about-the-denver-gold-forum/

Tech Talk at the Toronto World Money Show

Following is a link:

http://www.moneyshow.com/tradeshow/toronto/world_moneyShow/expert-details.asp?speakerid=6672FT1&scode=036363

Mark Leibovit’s comment on AAPL, YHOO, IEF, RWM, MYY

Following is a link:

http://www.youtube.com/watch?v=LsFk8NNM1Sc&feature=youtu.be

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 19^th 2014