Quantitative/Technical Analysis January 8, 2015

Transcription

1 Quantitative/Technical Analysis January 8, Macro/Technical Outlook SYMBOL NAME PAGE USD U.S. Dollar Index 2 XEU Euro Index 3 CDW Canadian Dollar Index 4 XAD Australian Dollar 6 XJY Japanese Yen 7 BRENT Brent Crude Oil - Spot Price 8 WTIC Oil - Light Crude - Continuous Contract 9 SILVER Silver - Continuous Contract 10 GOLD Gold - Continuous Contract 12 COPPER Copper Futures - Comex 14 CCI Reuters - CRB(CCI) Index 15 EEM ishares MSCI Emerging Markets 17 EWZ Brazil ishares 19 HYG ishares iboxx $ High Yield Corporate Bond 20 UST:SPX 10 Year Treasury Note Price:S&P 500 Index 22 TNX 10 Year Treasury Note Yield 23 SPX S&P 500 Large Cap Index 24 VEU Vanguard FTSE All World ex-u.s. 26 RUT Russell 2000 Small Cap Index 28 TSX S&P/TSX Composite Index 30 SPTSES S&P/TSX Smallcap Index 32 BHP BHP Billiton Ltd. 33 INTC Intel Corp. 34 US Dollar Index is breaking out of a decade long basing pattern into a long-term structural bull market. The Euro is breaking down out of a decade long top into a long-term structural bear market. The Canadian Dollar, Australian Dollar and the Japanese Yen are already entrenched in long-term structural bear markets. The rising US Dollar has pushed commodities into long-term structural bear markets. We believe the weakness in commodities has now spread to emerging markets and the high yield market. A 20% correction in the next 6-9 months for global equity markets would NOT surprise us. Joseph Farrell (416) jfarrell@gmpsecurities.com Tony Popowich (416) tpopowich@gmpsecurities.com Prepared by GMP Securities L.P. See important disclosures on the last page of this report

2 Figure 1. Monthly Technical Analysis The USD index is breaking out of a decade long base into a long-term structural bull market. We see minimum technical upside back to the 2001 highs above Any near-term pullbacks that occur should be used for further accumulation. 2

3 Figure 2. Monthly Technical Analysis The Euro is breaking down through the neckline of a decade long top into a long-term structural bear market. We see minimum technical downside back to the 2000 lows below parity. Any near-term rallies that occur should be used for further distribution. 3

4 Figure 3. Weekly Technical Analysis The CAD completed a 4-year head and shoulders top in late 2013, then retested and failed at the underbelly of the neckline at the $0.94 level in mid The fresh breakdown below $0.85 now targets further technical downside to the 2008/2009 double bottom at $

5 Figure 4. Monthly Technical Analysis The structural bull market for the CAD is over. We would view the 2008 low as a minimum downside technical target. 5

6 Figure 5. Monthly Technical Analysis The AUD is testing a confluence of long-term technical support at the $0.80 zone. We anticipate eventual downside resolution that would target the 2008 lows just above $

7 Figure 6. Monthly Technical Analysis The yen has just broken below the primary uptrend line in force since the early 1980s. A breakdown below 80 would target further technical downside to the low 60s. 7

8 Figure 7. Monthly Technical Analysis The structural bull market for Brent is over. We would view the 2008 low in the mid $30s as a minimum downside technical target. 8

9 Figure 8. Monthly Technical Analysis The structural bull market for WTI is over. We would view the 2008 low below $40.00 as a minimum downside technical target. 9

10 Figure 9. Weekly Technical Analysis Silver is trading below a second broken descending triangle pattern at the $18.50 zone. Any near-term rallies that occur should be used for further distribution. 10

11 Figure 10. Monthly Technical Analysis The structural bull market for silver is over. We continue to see further technical downside back to the 2008 low at the $8.00 zone. 11

12 Figure 11. Weekly Technical Analysis Gold continues to hold above the bottom of multi-quarter descending triangle consolidation at $ Like silver, we anticipate eventual downside resolution that would initially target to below $ Any near-term rallies that occur should be used for further distribution. 12

13 Figure 12. Monthly Technical Analysis The structural bull market for gold is over. We continue to see further technical downside back to the 2008 low below $

14 Figure 13. Monthly Technical Analysis Copper is incurring a MAJOR technical breakdown, identical to the 2014 breakdowns seen in Brent and WTI. We see long-term technical downside back to support highlighted at the $1.40 zone. Any near-term rallies that occur should be used for further distribution. 14

15 Figure 14. Weekly Technical Analysis The index has broken below the neckline of 4-year descending triangle top at the zone. 15

16 Figure 15. Monthly Technical Analysis The structural bull market for the index is over. We continue to see further technical downside back to the 2008 low. 16

17 Figure 16. Weekly Technical Analysis The EEM is incurring a major technical breakdown below the rising 3-year trendline just below $ We see minimum technical downside to the bottom of the larger weekly trading range at the $ zone. 17

18 Figure 17. Monthly Technical Analysis We believe the EEM is headed to test a confluence of long-term support at the $ zone. 18

19 Figure 18. Monthly Technical Analysis EWZ is incurring a major technical breakdown out of a multi-year descending triangle top. The breakdown introduces further technical downside to the vicinity of the 2008 lows in the low $20s. 19

20 Figure 19. Daily Technical Analysis The HYG has failed at the underbelly of its flattening 200-day moving average. The 50/100/200 day moving averages have completed a negative triple crossover. 20

21 Figure 20. Weekly Technical Analysis The HYG has broken down below the primary bull market trendline in force since The breakdown targets initial technical downside to below $ The top of the weekly Fibonacci retracement box provides the next key zone of support at $

22 Figure 21. Weekly Technical Analysis The ratio has reached the same technical levels seen in 2000 and 2007, consistent with equity market tops. 22

23 Figure 22. Weekly Technical Analysis Major overhead resistance is seen at the 2.40% to 3.00% zone. A retest of the 2012 low below 1.40% would not surprise us in the next 6 9 months. 23

24 Figure 23. Daily Technical Analysis The potential megaphone top being carved out since last fall is indicative of a highly emotional market witnessing a severe increase in volatility. 24

25 Figure 24. Weekly Technical Analysis We are concerned with where the megaphone top is appearing in the context of the larger trend. The index has advanced almost 214% off the March 2009 lows. A retest of the 2000/2007 double top breakout in the next 6-9 months would NOT be surprising to us. We would embrace such a pullback as an opportunity for excellent long-term accumulation. 25

26 Figure 25. Daily Technical Analysis The VEU has already failed at the underbelly of its flattening 200-day moving average. A potential year-long head and shoulders top is highlighted with key neckline support at the $ zone. A sustained breakdown would target initial technical downside to below $

27 Figure 26. Monthly Technical Analysis Completion of the head and shoulders top highlighted on the previous chart would also reverse the primary bull market trendline in force for the past 5+ years. We will be watching the $45.00 zone with great interest. 27

28 Figure 27. Daily Technical Analysis The index has been repelled again at the top of its year-long trading range. We would concede that a breakout above the range top would be indicative of further near-term investor risk appetite as we head into the first quarter of

29 Figure 28. Weekly Technical Analysis We remain cautious of the intermediate term risk/reward for investors as we trade near the top of the multi-year channel line. 29

30 Figure 29. Daily Technical Analysis The key near-term lines in the sand have clearly been drawn between 13,640 and just above 15,

31 Figure 30. Weekly Technical Analysis A double bottom breakdown below 13,640 would target more substantive technical support at the 12,900 zone. 31

32 Figure 31. Weekly Technical Analysis Critical long-term technical support is highlighted at the zone. A sustained breakdown would be a major negative technical event and target further downside to just under

33 Figure 32. Monthly Technical Analysis BHP is incurring a MAJOR technical breakdown, identical to the 2014 breakdowns seen in Brent and WTI and currently seen in copper. We see long-term technical downside back to the 2008 low highlighted above $ Any near-term rallies that occur should be used for further distribution. 33

34 Figure 33. Monthly Technical Analysis INTC has incurred a MAJOR long-term technical breakout of a 15-year basing process following the 2000 technology crash. We see minimum technical upside back to the 2000 high. The long, deep base supports much higher, longer-term technical targets. Any near-term pullbacks that occur should be used for further accumulation. 34

35 Disclosures The information contained in this report is drawn from sources believed to be reliable but the accuracy or completeness of the information is not guaranteed, nor in providing it does GMP Securities L.P. and/or affiliated companies or persons ("GMP") assume any responsibility or liability whatsoever. This report is not to be construed as an offer to sell or a solicitation of an offer to buy any securities. GMP may continue to, have a position in the securities mentioned herein, including options, futures or other derivative instruments thereon, and may, as principal or agent, buy and sell such products. Griffiths McBurney Corp., the US affiliate of GMP, accepts responsibility for the contents of this report subject to the foregoing. U.S. clients wishing to effect transactions in any security referred to herein should do so through Griffiths McBurney Corp. GMP will provide upon request a statement of its financial condition and a list of the names of its directors and senior officers. GMP. All rights reserved. Reproduction in whole or in part without permission is prohibited. 145 King Street West, Suite 300 Toronto, Ontario M5H 1J8 Tel: (416) ; Fax: (416) The opinions expressed in this report are based on a combination of a quantitative model and the historical trading patterns and trends of a security for various technical indicators in an effort to forecast price movements. The opinions expressed herein, including technical levels of trading trends, price resistance and/or support, may differ from GMP issuer(s) specific research reports and may communicate different or contradictory opinions, recommendations and price targets based upon a fundamental analysis of the issuer(s) businesses. The model portfolio referred to in this report is hypothetical. The purchase and sale prices of securities in this model are based on the prior day s VWAP and may not be representative of actual execution prices. Commissions are calculated at the rate of five cents for stocks at or over $5.00 and three cents for stocks under $5.00. Actual returns may differ from those of this model. GMP has no obligation to continuously inform investors of analysis or additional reports relating to the securities discussed in this report. For complete details of our quantitative model, please contact Joseph Farrell at (416) or your sales representative. 35