The Bottom Line
Weakness in equity markets over the next few weeks will provide a buying opportunity (particularly in sectors that benefit from favourable seasonal influences). Selected sectors (notably information technology) already are showing positive seasonal influences. Now is the time to do your home work in order to determine which securities will be top choices for investment during the November to April period of seasonal strength.
Editor Note: The highly recommended monday visit to this Don Vialoux report where he analyses an astonishing 40 plus Stocks, Commodities and Indexes.
6 charts and commentary below. Much more at this link HERE
The S&P 500 Index slipped 8.08 points (0.74%) last week. Intermediate trend is up, but is testing the trend line. The Index remains above its 50 and 200 day moving averages. Support is at 1,019.95. Volume continues to trend lower. MACD recorded a negative rollover from an overbought level on Friday. RSI recently turned lower after briefly reaching the 70%. Stochastics recorded a short term sell signal on Friday on a fall below 80%. First downside risk is to support at 1,019.
The TSX Composite Index lost 122.63 points (1.07%) last week. Intermediate trend remains up, but its trend line is being tested. The Index remains above its 50 and 200 day moving averages. The Index peaked five weeks ago at 11,648.55. Support is at 10,855.16. MACD and RSI rolled over last week from a short term overbought level. Stochastics recorded a short term sell signal on Friday on a move below 80%. Strength relative to the S&P 500 Index remains negative. First downside risk is to support at 10,855.
Weakness in the U.S. Dollar continues to dominate trader activity in equity and commodity markets. The modest recovery on Friday triggered significant selling in North American equity indices and commodities priced in U.S. Dollars. Strength was attributed to rumors of international central bank activity to stabilize the currency. The U.S. Dollar slipped another 0.15 last week. Intermediate trend remains down. Short term momentum indicators are oversold, but may be trying to recover. Upside potential is to its 50 day moving average at 77.00. The 50 day moving average has proven to be a reliable short term resistance level during the past six months. However, a recovery to the 50 day moving average should not be considered as a change in the Dollar’s intermediate downtrend.
The Canadian Dollar dropped 1.56 cents U.S. last week after the Bank of Canada “jaw boned” the currency lower. Resistance at the bottom of a band of resistance between 97 and 103 was confirmed. Intermediate trend remains up. Short term momentum indicators have rolled over from overbought levels and continue to trend lower. The Dollar remains above its 50 and 200 day moving averages. Downside risk is to its 50 day moving average at 93.33. Its 50 day moving average has proven to be a reliable support level during the past six months.
Crude oil added $1.48 U.S. per barrel last week, but stalled late in the week with the recovery in the U.S. Dollar. Intermediate trend remains up. Downside risk in a correction is to its 50 day moving average currently at $72.08. Upside potential is to $86.50,
Gold added $2.30 U.S. per ounce last week. Early technical signs of a short term peak have appeared. MACD and RSI have rolled over from a short term overbought level. However, technical requirement for seasonal profit taking (i.e. a move by Stochastics below 80% and at least one day when price moves lower than the previous day) have yet to be met. Requirements likely will be met this week. More information on seasonal trades in gold is offered near the end of this blog.
Click HERE. for the rest of the 40 plus charts and commentary on at charts of Indices, Currencies, Commodities…..and more…..
Don Vialoux has 37 years of experience in the Investment Industry. He is a past president of the Canadian Society of Technical Analysts (www.csta.org) and a former technical analyst at RBC Investments. Don earned his Chartered Market Technician (CMT) designation from the Market Technician Association in 1995. His CMT paper entitled “Seasonality in Canadian Equity Markets” was published in the Spring-Summer 1996 edition of the MTA Journal. Don also has extensive experience with Exchange Traded Funds (also know as Index Participation Units) as well as conservative option strategies. In 1990 he wrote a report that was released in the International Federation of Technical Analyst Journal entitled “Profiting from a Combination of Technical and Fundamental Analysis”. The report introduced ” The Eight Phases of the Stock Market Cycle”, an investment concept that continues to identify profitable entry and exit points for North American equity markets. He is currently a member of the Toronto Society of Fundamental Analyst’s Derivatives Committee. Now he is the author of a daily letter on equity markets available free on the internet. The reports can be accessed daily right here at www.dvtechtalk.com.