Technical Seasonalities

Transcription

1 Equity Clock: Seasonality Analysis April 17, 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 TimingTheMarket.ca. 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. Mr. Vialoux also offers advice to the Horizons Seasonal Rotation ETF (HAC). eresearch was established in 2000 as Canada's first equity issuer-sponsored research organization. Our various research packages allow corporate management to choose the form of research coverage that best meets their company s needs. We are a primary source for professional investment research, focused primarily on small- and mid-cap companies. Our research and analysis is of institutional quality, and has the potential to reach millions of global investors through our extensive electronic distribution network. 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 Friday, April 17, 2015 HEADLINE: Housing Starts and Building Permits well below seasonal average, indicating that the spring rebound is failing to materialize. The Markets Stocks ended flat on Thursday, weighed down by concerns out of the Eurozone. According to Reuters, Germany s finance minister said on Wednesday there was no prospect of the euro zone reaching a deal with Athens next week on economic reforms that would unlock bailout funds, potentially leaving Greece perilously short of money. Major European equity benchmarks, including the DAX and FTSE MIB, ended lower by close to 2%, testing levels around rising 20-day moving average lines. The Euro responded positively, moving higher from a level of support around 105, according to the Philadelphia Euro Index; double bottom support is becoming apparent. The short-term bottoming pattern would imply a move higher to around 115, or almost 7% higher than present levels, should resistance be taken out at 110. eresearch Corporation ~ 2 ~

3 Of course, the move higher in the Euro accompanied a move lower in the U.S. Dollar Index (see the two charts on the next page) as the currency benchmark finally looks poised to retrace some of its gains. The U.S. Dollar Index closed lower on Thursday by 0.92%, breaking below its 20-day moving average. Resistance is apparent around 100. As mentioned in a previous report, April and May typically see a topping process for the U.S. Dollar Index leading into the period of weakness from June through October. Despite any short to intermediate fluctuations, the longer-term trend in the dollar is expected to be higher following the significant break-out over the past year from the long-term basing pattern. eresearch Corporation ~ 3 ~

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5 The depreciation in the U.S. Dollar allowed for appreciation in the Canadian dollar, which continues to break above a basing pattern that topped out around 80.60, according to the Philadelphia Canadian Dollar Index. See the chart below. Both the 20- and 50-day moving averages for the currency benchmark are starting to curl higher, suggesting positive short and intermediate-term momentum. Seasonally, April is the strongest month of the year for the Canadian currency, gaining on the back of strength in the price of Oil. See next chart. Average gains continue through to mid-july, although the frequency of positive results is much more variable between May and July. The currency has charted a parabolic move lower over the past nine months, suggesting a retracement of the declines was due. Longer-term resistance has been apparent at its 200-day moving average, currently at 86.53, or around 5.5% higher than present levels. eresearch Corporation ~ 5 ~

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7 Natural Gas was in the news on Thursday following the latest storage report, which indicated a 63 bcf build in the previous week, well above the previous build of 15 bcf. Despite the significant increase in storage levels, the year-to-date change remains in line with the seasonal average for this time of year. Natural gas in storage seasonally increases between now and November as demand diminishes following the cold winter months. eresearch Corporation ~ 7 ~

8 Resistance in the price of the energy commodity remains apparent around the 50-day moving average, as shown on the chart below. Homebuilding stocks recorded significant declines during Thursday s session following the latest Housing Starts report. The S&P Homebuilders Index ETF (XHB) (chart on the next page) ended lower by 1.77%. The headline print indicated that starts rose 2% to a seasonally adjusted annual rate of 926,000, well below the consensus forecast of 1,040,000. Stripping out seasonal adjustments, housing starts rose by almost 22%, well below the average increase of 35% for the month of March. Despite a significant uptick in starts in the Northeast, which rebounded following the adverse winter weather in the region, weak results in the larger regions of the South and West weighed on the overall result. Charts for the four major regions are provided subsequently. eresearch Corporation ~ 8 ~

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11 Following are four charts showing the seasonality of housing starts in four U.S. regions. eresearch Corporation ~ 11 ~

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13 Building Permits, an indication of future starts, were also weak, advancing 17% last month, below the average March gain of 36%, based on data from the past 50 years. Yet, again, more economic data that suggests the spring rebound is not as robust as expected, raising concerns over the overall economic health of the country. Data released next month for April will confirm whether the rebound in economic activity following the extreme winter has been lost or whether it is just merely delayed. Seasonally, housing stocks enter a period of seasonal weakness between now and October. <continued> eresearch Corporation ~ 13 ~

14 Put-Call Ratio Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at <continued> eresearch Corporation ~ 14 ~

15 Seasonal Charts A. Sectors and Industries Entering Period of Seasonal Strength Today: None today. B. Stocks Entering Period of Seasonal Strength Today None today. C. Seasonal Charts of Companies Reporting Earnings Today <continued> eresearch Corporation ~ 15 ~

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19 S&P 500 Index eresearch Corporation ~ 19 ~

20 TSE Composite eresearch Corporation ~ 20 ~

21 Horizons Seasonal Rotation ETF (TSX: HAC) Closing Market Value: $16.43 (down 0.06%) Closing NAV/Unit: $16.41 (up 0.22%) Performance* 2015 Year-to-Date Since Inception (Nov. 19, 2009) HAC.TO 8.46% 64.1% * performance calculated on Closing NAV/Unit as provided by custodian Click Here to learn more about the proprietary, seasonal rotation investment strategy developed by research analysts Don Vialoux, Brooke Thackray, and Jon Vialoux. 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 on the ensuing page. eresearch Corporation ~ 21 ~

22 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: Horizons AlphaPro Seasonal Rotation ETF (HAC) Interested in the methodologies and strategies presented by Tech Talk? The Horizons AlphaPro Seasonal Rotation ETF (trading on the Toronto Stock Exchange under symbol HAC) uses a proprietary, seasonal rotation investment strategy developed by research analysts Don Vialoux and Brooke Thackray. The strategy s core position consists of broad markets at seasonally favourable times of the year and money market securities at seasonally unfavourable times of the year. The strategy allocates from the core portfolio to various sectors when those sectors offer favourable opportunities. Rotating a portfolio in anticipation of these opportunities is designed to deliver returns that are superior to a static investment in broad markets. As seasonal periods are never the same, this investment strategy is supported by additional fundamental and technical analysis. For more information, Click Here. ############ eresearch Corporation ~ 22 ~