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Tech Talk is a free stock market letter service available at http://TimingTheMarkets.com and http://EquityClock.com written by notable analysts Don and Jon Vialoux. Interested in the methodologies and strategies presented by Tech Talk? The Horizons AlphaPro Seasonal Rotation ETF (trading on the... More
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  • Weekly Technical Review of Select Sector SPDRs
    • Economically sensitive sectors (Technology, Materials, Industrials, Consumer Discretionary, Energy) have outperformed the S&P 500 since July but underperformed the S&P 500 Index last week.
    • Best performing sector was Financials. Worst performing sectors were Utilities and Health Care.
    • Materials, Industrials, Consumer Discretionary and Energy reached two year highs during the week. Technology, Consumer Staples and Financials are testing resistance and could reach two year highs shortly.
    • Short term momentum indicators for all sectors except Utilities are overbought, but have yet to show signs of peaking.
    • All sectors are in an intermediate uptrend. All sectors are trading above their 200 day moving averages. All sectors except Utilities are trading above their 50 day moving average.

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    Tags: XLP, XLU, XLK, XLV, XLI, XLY, XLB, XLE, XLF
    Dec 10 3:58 AM | Link | Comment!
  • Financial Strength and Utility Weakness

    Technical Action Yesterday

    Technical action by S&P 500 stocks was bullish again yesterday. Eleven S&P 500 stocks broke resistance (Akamai, Corning, Lincoln National, Ameriprise Financial, Comerica, Hudson City Bancorp, MetLife, PNC Financial, SAIC Inc. Unum Group and Wells Fargo) and three stocks broke support (Duke Energy, Scana Corp. and American Electric Power). The Up/Down ratio increased from 5.41 to (382/70=) 5.46.

    Technical action by TSX Composite stocks once again was mixed. Four TSX stocks broke resistance (Major Drilling, Rona, Savanna Energy and Transcontinental) and four stocks broke support (Manitoba Telecom, Sears Canada, Fairfax Financial, Shoppers Drug). The Up/Down ratio increased from 4.09 to (144/35=) 4.11.

    Interesting Charts

    S&P 500 stocks breaking resistance were dominated by financial service stocks, most notably regional bank stocks (e.g. Hudson City Bancorp, Comerica). The Regional Banking SPDR broke resistance to reach a five month high.

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    The long term Treasury ETF prices continued under significant pressure. Mixed success of the 10 year auction completed yesterday added to weakness. Traders will watch the 30 year auction today very closely.

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    Interest sensitive equities are starting to respond to higher Treasury yields. Notable on the list of stocks breaking support yesterday were utility stocks (e.g. Duke Energy, American Electric Power)

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    Tags: AEP, DUK, TLT, CMA, HCBK, KRE
    Dec 09 6:15 AM | Link | Comment!
  • Stock Market Outlook for December 9, 2010
    Upcoming Events for Today:
    1. Weekly Jobless Claims will be released at 8:30am.   The market expects Initial Claims to come in at 429K versus 436K previous.   Continuing Claims are expected to reveal 4240K versus 4270K previous.
    2. Wholesale Inventories for October will be released at 10:00am.   The market expects an increase of 0.7% versus an increase of 1.5% previous.
      The Markets
    Market Close % Change Expected ST Low Expected ST High
    Dow Jones Industrial Average (^DJI) 11,372.48 0.12% 11,046.91 11,387.79
    Dow Jones Transportation Average (^DJT) 5,039.97 -0.40% 4,754.58 5,021.92
    Dow Jones Utility Average (^DJU) 394.18 -0.38% 393.54 406.84
    S&P 500 (^GSPC) 1,228.28 0.37% 1,181.24 1,222.99
    S&P/TSE Composite (^GSPTSE) 13,152.00 -0.74% 12,616.66 13,141.58
    NASDAQ Composite (^IXIC) 2,609.16 0.41% 2,492.99 2,589.05
    French CAC 40 (^FCHI) 3,831.98 0.56% 3,686.91 3,903.47
    German DAX (^GDAXI) 6,975.87 -0.37% 6,643.57 6,931.08
    UK FTSE 100 (^FTSE) 5,794.50 -0.24% 5,615.11 5,843.50
    Swiss Market Index (^SSMI) 6,508.10 0.71% 6,409.05 6,588.41
    Brazilian IBOVESPA (^BVSP) 68,175.00 -1.68% 68,394.97 72,140.26
    Mexico’s IPC (^MXX) 37,617.77 -0.69% 35,507.95 37,494.41
    Amsterdam Exchange Index (^AEX) 346.72 0.15% 333.61 346.46
    Shanghai – SSE Composite Index (000001.ss) 2,848.55 -0.95% 2,834.31 3,112.83
    New Zealand NZX 50 INDEX GROSS (^NZ50) 3,294.34 0.38% 3,265.75 3,327.81
    China HANG SENG INDEX (^HSI) 23,092.52 -1.43% 23,042.92 24,642.45
    Korea KOSPI Composite Index (^KS11) 1,955.72 -0.35% 1,900.75 1,955.51
    Tokyo NIKKEI 225 (^N225) 10,232.33 0.90% 9,309.20 10,157.45

     

    Markets ended mixed on Wednesday as faltering commodity prices were offset by gains in Financials and Technology.   Key indices sputtered around on the day as increases in interest rate yields and a rising US Dollar index kept pressure on materials, pushing Gold, Silver and Oil lower on the day.   Trendlines for each of the key commodities remains positive and temporary pullbacks are warranted given the significant run since the beginning of December.   Seasonal tendencies remain positive for Gold, Silver and Oil into the end of the year, however, the majority of the seasonal gains for December customarily occur in the last half of the month, implying that a pullback at this juncture will be short-lived.   Final passing of the bush-era tax cuts could distort this seasonal action, causing gains to be constrained to within the first few weeks of the month, leaving the remainder of the year range-bound.   The next few weeks should see some of the overhanging issues to this market alleviated.   Passing of the tax-cut extension is imminent while interest rate increases in China are largely rumored to occur this weekend.   Net-Net the two actions may negate any action within key US indices, leaving the market free to proceed with the Santa Claus Rally in the weeks to come.   Targets on the S&P 500 Index by year-end remain between 1225 to 1250.   As of Wednesday’s close, this has already been achieved.   Markets still have a lot of potential to rally within the first two or three quarters next year, implying that adding exposure to equity markets on any weakness remains the prudent action.   Should December play out according to seasonal tendencies, a correction should be expected sometime in January as investors take profits from the substantial rally that commenced at the beginning of September.

    Another index has broken through to new highs on a closing basis.   The S&P 500 Index overtook the 1225 resistance, finishing around 1,228 on the day.   This leaves just the Dow Jones Industrial Average, which has yet to achieve these new 52-week high levels.   Investors are expected to take profits for the year at these newly ventured levels, therefore indices may struggle to maintain current levels of momentum as investors adapt to the new norms.

    Investor sentiment remains at very bullish levels with the put-call ratio coming at 0.74.   With the VIX below 18 and call options continuing to be favored amongst investors, complacency is a major concern as equity markets become prone to shocks as investors let their guard down due to present day euphoria.   As we move further into target territory on equity indices, profit-taking pressures and escalation of market uncertainties can leave investors exposed to increasing risks.   A certain amount of put protection is warranted to guard against any moves against positions.

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      Sectors that Moved the Markets
    Sector % Price Change % Volume Change
    Energy Sector (NYSEARCA:XLE) -0.47% -44.42%
    Basic Materials Sector (NYSEARCA:XLB) -1.05% 11.77%
    Financial Sector (NYSEARCA:XLF) 1.65% -9.30%
    Health Care Sector (NYSEARCA:XLV) 0.10% -24.74%
    Consumer Discretionary Sector (NYSEARCA:XLY) -0.27% -19.81%
    Industrials Sector (NYSEARCA:XLI) -0.35% -5.94%
    Technology Sector (NYSEARCA:XLK) 0.85% -9.08%
    Utilities Sector (NYSEARCA:XLU) -0.36% -15.26%
    Consumer Staples Sector (NYSEARCA:XLP) 0.38% -44.25%

     

    Technology and Financials were the clear leaders on the day.   The financial sector continues to push higher out of a range that has kept equities constrained for the past seven months.   As well, Technology is continuing to perform strongly within its period of seasonal strength that persists through to January.   Both sectors are pushing closer to the highs produced back at the beginning of November and a breakout of both of these sectors above previous highs could act as a catalyst to push equity indices higher.   Materials were strongly influenced by the rising dollar and rising rates, causing commodities to weaken for the second day.   Seasonal tendencies for the sector remain positive into January.

      S&P 500 Index

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    Chart Courtesy of StockCharts.com

    Support 2 Support 1 Pivot Point Resistance 1 Resistance 2
    1216.14 1222.21 1225.57 1231.64 1235.00

     

    Total Returns

    Yesterday: 0.37%  –  Trailing 5 days: 1.84%  –  Trailing 30 days: 0.41%

    Averages for current day based on past 20 years of data

    • Current Day: –0.26% with 50.00% of sessions gaining
    • Next 7 days: –0.71% with 48.00% of sessions gaining (Max return: 0.65% by December 11 on Average)
    • Next 30 days: 1.10% with 54.15% of sessions gaining (Max return: 2.79% by December 28 on Average)
      TSE Composite

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    Chart Courtesy of StockCharts.com

    Support 2 Support 1 Pivot Point Resistance 1 Resistance 2
    13071.06 13111.53 13172.91 13213.38 13274.76

     

    Total Returns

    Yesterday: –0.74%  –  Trailing 5 days: 0.03%  –  Trailing 30 days: 0.76%

    Averages for current day based on past 10 years of data

    • Current Day: –0.57% with 33.33% of sessions gaining
    • Next 7 days: –0.83% with 40.00% of sessions gaining (Max return: 0.62% by December 11 on Average)
    • Next 30 days: 1.28% with 52.10% of sessions gaining (Max return: 3.74% by December 30 on Average)

    Dec 09 6:12 AM | Link | Comment!
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