Editor Note: Money Talks highly recommends that you make a regular trip to this monday morning site to this Don Vailoux monday report where he analyses an astonishing 40 to 50 Stocks, Commodities and Index charts and, provides a “Bottom Line” and some very interesting commentary.
Be sure to check out Don Vialoux’s Long Term Forecast at January 22,23rds
U.S. equity index futures are higher this morning. S&P 500 futures are up 6 points in pre-opening trade. Futures are responding to comments over the weekend by members of Congress and the White House assuring bi-partisan support for the renomination of Ben Bernanke as chairman of the Federal Reserve. The Senate must approve the renomination by January 31st.
The U.S. Dollar weakened on the news. The weaker U.S. Dollar triggered strength in commodities priced in U.S. Dollars. Gold, silver, copper, platinum and crude oil are trading higher. The U.S. Dollar has found short term resistance at its 200 day moving average.
AK Steel added 5% after reporting higher than consensus fourth quarter earnings. The company continues to benefit from rising steel prices.
Apple added 2%. Traders are anticipating launch of Apple’s tablet on Wednesday.
Goldcorp added 1% following an upgrade from Hold to Buy by TD Newcrest. Target price is $50.
Thomson Reuters improved 1% following an upgraded by Citigroup from Hold to Buy.
Bank of Nova Scotia was upgraded by Macquarie from Neutral to Outperform.
Economic News This Week
Focus this week is on the Federal Reserve Open Market Committee (FOMC) meeting on Wednesday and preliminary U.S. fourth quarter GDP on Friday.
January Consumer Confidence to be released at 10:00 AM EST on Tuesday is expected to slip to 52.9 from 53.3.
December New Home Sales to be released at 10:00 AM EST on Wednesday is expected to increase to 370,000 from 355,000.
News from the FOMC meeting is scheduled to be released at 2:15 PM EST on Wednesday. No change in administered rates (i.e. Fed Fund rate) is expected.
January Durable Goods Orders to be released at 8:30 AM EST on Thursday is expected to increase 2.0% versus a gain of 0.2% in December.
Fourth quarter real GDP to be released at 8:30 AM EST on Friday is expected to grow at a 4.5% annualized rate versus a gain of 2.2% in the third quarter.
January Chicago PMI to be released at 9:45 AM EST on Friday is expected to slip to 56.0 from 58.7 in December.
January University of Michigan Sentiment Index is expected to improve to 73.0 from 72.8 in December.
Earnings News This Week
U.S. fourth quarter earnings reports pour in this week. Canadian earnings reports start to trickle in. Following is a list of prominent companies scheduled to report and their expected report dates:
Monday sees a report from Union Pacific
Tuesday sees Baker Hughes, Canadian National Railway, Dupont, Johnson & Johnson, Nucor, Travelers and U.S. Steel, Verizon and Yahoo.
Wednesday sees Abbott Labs, AGF, Boeing, Canadian Oil Sands Trust, Caterpillar, Celestica, CGI Group, Conoco Phillips, Illinois Tool Works, Methanex, Norfolk Southern and United Technologies.
Thursday sees MMM, AT&T, Becton Dickenson, Bristol Myers, Canadian Pacific, Colgate, Eli Lilly, Lockheed Martin, Microsoft, Potash Corp and Procter & Gamble.
Friday sees Chevron and Honeywell.
Equity Index Trends
The ratio of S&P 500 stocks in an uptrend to a downtrend (i.e. the Up/Down ratio) plunged last week from 5.77 to (344/81=) 4.25 (including 38 stocks that broke support on Friday). The ratio has rolled over and established an intermediate downtrend.
P.S. This Up/Down ratio is a preliminary estimate and does not include our regular due diligence. An exact figure will be offered tomorrow. Ditto for the TSX Up/Down ratio!
Bullish Percent Index for S&P 500 stocks dropped last week from 83.00% to 77.00% and fell below its 15 day moving average. The Index remains intermediate overbought and appears to be forming an intermediate downtrend.
Ed Note: 5 of the 41 Charts Canada’s Great Technical Analyst Don Vialoux analyses and comments on HERE (scroll down)
The Dow Jones Industrial Average fell 436.67 points (4.12%) last week. It also fell below its 50 day moving average and broke below its intermediate uptrend line. Short term momentum indicators have rolled over from overbought levels and are trending lower. Stochastics already are short term oversold, but has yet to show signs of bottoming. Seasonal influences are positive. Strength relative to the S&P 500 Index remains negative. Intermediate downside risk is to support at 9,679.
The TSX Composite Index lost another 341.94 points (2.93%) last week. It already has fallen 6.0% from its peak set on January 11th. Last week, it broke below its 50 day moving average and its intermediate uptrend line. Short term momentum indicators are trending lower from intermediate overbought levels. Stochastics and RSI already are short term oversold, but have yet to show technical signs of bottoming. Seasonal influences remain positive. Strength relative to the S&P 500 Index remains negative.
The Shanghai Composite Index fell 95.57 points (2.96%) last week. It fell below its 50 day moving average and below a seven month triangle pattern. Support is at 3,040. Short term momentum indicators have rolled over from an overbought level. Stochastics already are short term oversold, but have yet to show signs of bottoming. Strength relative to the S&P 500 Index remains neutral.
The Canadian Dollar fell 2.64 points last week mainly because of declining commodity prices. On Friday, it broke below its 50 day moving average. Support is indicated at 92.16. Short term momentum indicators are trending lower. Stochastics already are short term oversold, but have yet to show signs of bottoming.
Seasonal influences on the Canadian Dollar relative to the U.S. Dollar turn negative from January to March. They turn positive thereafter. Following is a chart offered by Brooke Thackray showing seasonality of the Canadian Dollar relative to the U.S. Dollar from 1971 to 2009. Strongest month for the Canadian Dollar is the month of April.
….more charts at Don Vailoux‘s monday report HERE
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.