Technical Seasonalities

Transcription

1 Equity Clock: Seasonality Analysis November 3, 2015 Technical Seasonalities eresearch Corporation is pleased to provide technical opinions on the market from a seasonality standpoint, courtesy of Equity Clock, a division of the Tech Talk Financial Network. eresearch also posts, daily, the regular technical opinions provided by affiliate: Tech Talk: TimingTheMarket. Equity Clock ( is a market analysis company that provides, completely FREE, technical, fundamental and seasonality analysis on a daily basis via TimingTheMarkets.com and EquityClock.com. Equity Clock s mission is to identify periods of re-occurring strength among individual equities in the market using methodologies presented by some of the top analysts in the industry, including those of Donald Vialoux, author of TimingTheMarkets.com. Donald Vialoux, co-founder of Tech Talk, is a past president and director of the Canadian Society of Technical Analysts (CSTA). He holds the designation of Chartered Market Technician (CMT). Mr. Vialoux has 45 years of experience in the investment industry, including prominent positions held at Richardson Greenshields and RBC Investments. He is the author of a daily letter on equity markets, which is available free at Mr. Vialoux is also the author of a weekly column published at GlobeAndMail.com that combines technical, fundamental, and seasonality analysis. He is a frequent presenter on Business News Network (BNN) Television. eresearch was established in 2000 as Canada's first equity issuer-sponsored research organization. As a primary source for professional investment research, our Subscribers (subscription is free!!!) benefit by having written research on a variety of small- and mid-cap, under-covered companies. We also provide unsponsored research reports on middle and larger-sized companies, using a combination of fundamental and technical analysis. We complement our corporate research coverage with a diversified selection of informative, insightful, and thought-provoking research publications from a wide variety of investment professionals. We provide our professional investment research and analysis directly to our extensive subscriber network of discerning investors, and electronically through our website: Bob Weir, CFA: Director of Research Note: All of the comments, views, opinions, suggestions, recommendations, etc., contained in the TechTalk/Timing The Market articles, reports, files, documents, essays, etc., and which are distributed by eresearch Corporation, are strictly those of TechTalk/Timing The Market and do not necessarily reflect those of eresearch Corporation. eresearch Corporation 78 Cameron Crescent, Suite 202 Toronto, Ontario M4G 2A3

2 Stock Market Outlook for Tuesday, November 3, 2015 HEADLINE: Russell 2000 Small Cap Index moving above a head-and-shoulders bottoming pattern. The Markets Stocks recorded a massive risk-on session on Monday, with the Nasdaq 100 Index closing within 1-point from its all-time closing high charted back in The S&P 500 Index continues to push towards the all-time highs presented around The most notable activity was in the performance of the Russell 2000 Small Cap Index, which moved above a head-and-shoulders bottoming pattern. The bullish setup targets an upside move towards the all-time highs below Small caps have been underperforming the market since the end of June, highlighting the risk aversion present within the market leading up to the equity plunge in the month of August. While the 20-day moving average of the relative trend continues to point lower, the bullish chart pattern may turn some heads, leading to increased risk-taking into the end of the year. Seasonally, the Russell 2000 Small Cap Index starts to outperform the S&P 500 Large- Cap Index in the month of November, running through to March of the following year. The small-cap Index has shown a high frequency of gains in the last two months of the year. While the S&P 500 Index has realized gains 75% of the time in November and December, over the past 20 years, the small cap index has gained 80% and 90% of the time, respectively, as investors show their willingness to take on risk as the best six months of the year for stocks gets underway. eresearch Corporation ~ 2 ~

3 ^RUT Relative to the S&P 500 eresearch Corporation ~ 3 ~

4 Reverting back to the S&P 500 Index, Monday s move higher in equity prices to start the month of November resulted in a bounce for the large cap index precisely from the short-term rising trendline that has lifted the benchmark throughout October. But as mentioned in a previous report, this rising trendline also forms the basis of the lower limit of a rising wedge pattern, the upper limit of which is presently being tested. A break of the lower bound, now around 2090, would initiate a retracement of the 5-week old trend. Monday s equity gains in North American indices were seemingly fuelled by strength in European markets following better than expected manufacturing data for October. Back in the US, manufacturing activity, as gauged by the ISM Index, came in at a rather lacklustre 50.1, neither indicating expansion nor contraction. Elsewhere, a report on Construction Spending in the US suggests an extension to the typical construction season that runs from March through to August. Headline print indicated that construction spending rose by 0.6% in September, better than the consensus estimate of a gain of 0.4%. Stripping out seasonal adjustments, construction spending actually grew by 0.8%, a significant shift from the average contraction of 1.8% in the month of September, based on data from the past 20 years. eresearch Corporation ~ 4 ~

5 Typically, the last four months of the year sees declines in construction spending as projects wrap-up ahead of the winter season. Strength was driven by the residential components of the report, something that was apparent in the recent report on housing starts. While some of the home-building stocks continue to lag the broad market, the Global Timber and Forestry Index Fund (WOOD) popped on Monday, moving above a head-and-shoulders bottoming pattern. Seasonally, forest product stocks tend to gain on an absolute and relative basis starting in November, running up to the start of the home construction season in the spring. eresearch Corporation ~ 5 ~

6 S5FRST Index Relative to the S&P 500 eresearch Corporation ~ 6 ~

7 Put-Call Ratio Sentiment on Monday, as gauged by the put-call ratio, ended bullish at Seasonal Charts A. Sectors and Industries Entering Period of Seasonal Strength Today None B. Stocks Entering Period of Seasonal Strength Today None C. Seasonal Charts of Companies Reporting Earnings Today CTRL-Click here to view today s charts: VIEW SLIDE SHOW DOWNLOAD ALL eresearch Corporation ~ 7 ~

8 S&P 500 Index eresearch Corporation ~ 8 ~

9 TSE Composite eresearch Corporation ~ 9 ~

10 Special Free Services Available through 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. Notice that most of the seasonality charts have been updated recently. To login, simply go to ########## BW: Information on Equity Clock is provided below. Equity Clock Equity Clock is a division of the Tech Talk Financial Network, a market analysis company that provides technical, fundamental, and seasonality analysis on a daily basis via TimingTheMarkets.com and EquityClock.com. Equity Clock s mission is to identify periods of reoccurring strength among individual equities in the market using methodologies presented by some of the top analysts in the industry, including that of Don Vialoux, author of TimingTheMarkets.com. Feel free to use any of the content or seasonality studies (charts, timelines, or otherwise) presented as long as a link-back to this site at EquityClock.com is provided. For further information on indicators used in reports presented on this site, please visit our reference page. Equity Clock Website: ############ eresearch Corporation ~ 10 ~