Technical Seasonalities

Transcription

1 Equity Clock: Seasonality Analysis August 25, 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. 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. 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, August 25, 2015 HEADLINE: Keep the Canadian Banks on your radar as they get set to report earnings this week. The Markets Panic selling continued on Monday in what resulted in a wild and volatile session for stocks. The S&P 500 Index fell over 5% at the open, trading to lows last realized in October, eventually closing the session down around 4%. Key benchmarks around the globe are firmly into oversold territory according to a number of momentum indicators, including the 14-day Relative Strength Index (RSI), which on the S&P 500 Index sits at 18.33; levels below 30 on the RSI indicate an oversold level. This is the most oversold the U.S. equity market has been since August 8 of 2011 following the plunge of around 17% over a period of a few days. It was from this oversold level back in 2011 that an oversold bounce emerged, allowing nimble traders to capture value in beaten down names. However, as highlighted in yesterday s report, the ultimate low in the large-cap benchmark was not realized until almost two months following the conclusion of the initial plunge as traders sold what amounted to be a dead-cat bounce. eresearch Corporation ~ 2 ~

3 We are now officially into this dead-cat bounce watch period where the gains could be swift and plentiful but, given the technical damage created in just the past three trading days, the ultimate low is yet to be seen. Regardless of when the low in the broad market is hit, investors should have their shopping list ready. Two months remain in the seasonal weakness for stocks, but opportunities can emerge before the average low for the broad market of October 27. Technology and Transportation stocks enter their period of seasonal strength at the start of October with the window of entry opening up as early as September. Some of the more defensive areas of the market, such as Consumer Staples and Telecoms, can continue to show strength relative to the market through to the end of the year. Investors looking to take a position in the Canadian banks should put the sector on their radar as they get set to report this week. Each of Canada s Big Five show seasonal tendencies that start to turn positive around late August and into September, gaining through to late November. The relative performance of the S&P/TSX Capped Financial Services Index (see chart below) is starting to point higher, suggesting buying demand. While the trading activity over the past few days looks increasingly dire, the long-awaited market correction should bring a number of opportunities to get into favoured sectors at discounted levels. eresearch Corporation ~ 3 ~

4 1. BANK OF MONTREAL <CONTINUED> eresearch Corporation ~ 4 ~

5 2. TORONTO-DOMINION BANK <CONTINUED> eresearch Corporation ~ 5 ~

6 3. THE BANK OF NOVA SCOTIA <CONTINUED> eresearch Corporation ~ 6 ~

7 4. CANADIAN IMPERIAL BANK OF COMMERCE <CONTINUED> eresearch Corporation ~ 7 ~

8 5. THE ROYAL BANK OF CANADA <CONTINUED> eresearch Corporation ~ 8 ~

9 Big Five Three-Month Average Market Return Comparison (by eresearch) eresearch has compiled a table of average market returns for the Big Five based upon the statistics provided above by Equity Clock. Given that seasonal strength for the banks is evident from the beginning of September until the end of November, we have used just these three months for our comparison. The five bank stocks are ranked highest average return to lowest in the table below: Average Monthly % Return RY BMO CM TD BNS September 1.7% 1.6% 1.2% 1.0% 2.8% October 4.2% 2.4% 2.9% 2.4% 2.2% November 2.2% 2.0% 2.5% 2.6% 1.2% Gain Frequency September 68% 68% 58% 68% 63% October 79% 79% 68% 58% 63% November 68% 79% 74% 68% 58% Three-Month Weighted Score 1.99% 1.52% 1.51% 1.28% 1.28% As shown above, The Royal Bank of Canada far surpasses the other four banks in average return over the three-month holding period. The Bank of Montreal and The Canadian Imperial Bank of Commerce come second (almost a dead heat) and, actually tied, are The Toronto-Dominion Bank and The Bank of Nova Scotia. Put-Call Ratio Sentiment on Monday, as gauged by the put-call ratio, ended bearish at eresearch Corporation ~ 9 ~

10 Seasonal Charts A. Sectors and Industries Entering Period of Seasonal Strength Today None. B. Stocks Entering Period of Seasonal Strength Today TRANSAT AT Inc (TSE:TRZ.A, TRZ.B) Seasonal Chart C. Seasonal Charts of Companies Reporting Earnings Today eresearch Corporation ~ 10 ~

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13 S&P 500 Index eresearch Corporation ~ 13 ~

14 TSE Composite eresearch Corporation ~ 14 ~

15 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 ~ 15 ~