Home Experience MGI Securities Subscribe News Contact Us
Toronto Stock Broker David Chapman
May 20, 2015

Technical Commentary suppliment

- The US stock markets may be making new highs but the Cdn stock markets are essentially

treading water with both the TSX Composite and the TSX 60 up a meagre 0.1% and 0.2% over

the past week.

- Only four of the fourteen sub-indices were up on the week while two were flat and the remaining

eight were down.

- Leading the way to the upside was Health Care gaining 2.7% while Information Technology

jumped 1.3% and Financials were up 1.1%.

- The biggest loser was Metals & Mining down 2.7% while Golds were off 2.1% and Energy

dropped 1.4%.

- There was only one intermediate change as follows: Telecommunications neutral to up.

- Short-term trend changes were as follows: Consumer Staples neutral to down; Health Care

neutral to up; and Information Technology down to neutral.

- There were no new highs or lows.

(Click here for more)

May 18, 2015

Technical Commentary

This week…..

-          Monday May 18, 2015 is the Victoria Day holiday in Canada and Monday May 25, 2015 is the Memorial Day holiday in the US.

-          Despite weak economic numbers and a rocky global bond market the US stock markets seemed to focus on the positive that the Fed won’t be in a hurry to hike rates. US markets closed at almost record highs this past week. Well, all except the DJT that is. A divergence? The TSX Composite actually fell on the week not following the US markets to nirvana.

-          The bond market fell once again this week. Well most of the week anyway but late in the week with weak US economic numbers and low inflation numbers the markets decided they might have overdone it and rebounded closing the week almost unchanged. Could the recent bond sell-off be over? Could be. Odds do not favour a Fed rate hike in June given recent economic numbers.

-          Gold, silver and the gold stocks were all up this past week as the US$ continued its recent decline. Silver actually broke which suggests gold could soon follow. Still lots of work to do but the potential to rise to $1,280 for gold on this up wave remains possible.

-          As noted the US$ Index fell again this past week as the Euro and the other currencies continued their recent strength.

-          Oil prices were up on the week but the energy stocks did not fare well. A divergence in the energy patch? Confirmations are important and when it doesn’t happen it usually suggests that one of them is wrong. Supplies in the US fell this past week though and that could be positive for oil.

May 13, 2015

Technical Commentary

Given the shift to using www.stockcharts.com for charts I am making a few changes. The weekend technical commentary provided information on the TSX sub-indices and ETF’s. This report will update those areas on a most weekly basis while the weekend report will continue to concentrate on the markets (stocks, bonds, precious metals, currencies and energy). The change however means some charts will be added looking at either the ETFs or the TSX sub-indices. Four charts are noted in the write-up.

Note: Nice up day for gold. Challenging $1,215 resistance. Silver through resistance at $17.

May 10, 2015

Technical Commentary

This week…..

-          My data provider (Dial Data) of the past fifteen or more years has crashed. I have no idea when they will be back. I have been receiving sporadic updates but a lot of data is missing including most of the data I would use for my reports. Even their website is down. As well the charting system I use has been TradeStation 2000i a system no longer serviced by Omega Research as they specialize in high end trading platforms. TradeStation 2000i only operates on Windows XP that is also no longer serviced.  As a result I have switched to www.stockcharts.com a source that many others use. Trouble is it takes a while to learn their systems and how they are organized and how I can use it effectively. They do not appear to have data on Cdn bonds but they can be maintained on Dial Data/TradeStation manually.

-          Janet Yellen thinks the stock market is overvalued. But that didn’t stop the S&P 500 and the other US indices to jump this past week following the release of the nonfarm payrolls that were about as expected. The market seemed to ignore the downward revision of the previous month. Are new highs possible now? Yes.

-          Bond prices fell earlier in the week but rebounded on Friday following the nonfarm payrolls ending the week almost even. The downward revision of the March nonfarm payrolls coupled with the very weak trade numbers suggested that Q1 GDP most likely will be revised down. This has helped push thinking on an interest rate hike by the Fed out to September.

-          Gold meandered this past week as it has for the past few. $1,170 remains support and $1,200/$1,215 remains resistance. Gold could go either way here as the charts have dual interpretations.

-          Oil prices rose again but the energy stocks sold off. Oil’s upward momentum is fading and the chart pattern remains suggestive that oil’s rise has been corrective only. Still there might be a bit more upward movement for oil prices but they could soon be topping out.

May 3, 2015

Technical Commentary

This week….

-          An issue with my data provider left me updating some of the data by hand. That is a time consuming process. Result it “bit” into my time so this week’s report is a shortened version.

-          The stock markets were down this week as they reacted negatively to economic numbers especially the weak Q1 GDP data. Some other numbers were encouraging and as suspected the FOMC left interest rates unchanged and gave their usual mixed report on the market and what they might do going forward.

-          Bonds fell in price this week (yields rose) as bonds in the Euro zone sold off and the bond market reacted negatively a rise in consumer confidence and the manufacturing indices of Chicago and the ISM.

-          Gold, silver and the gold stocks all enjoyed an up week as the US$ fell. Gold put in a volatile week both up and down but did manage to eke out a gain for the week. The gold stocks had a strong week averaging gains of 3.5% to 4%.

-          Oil prices continued their recent strength hitting up to about $60 for WTI. WTI oil appears to be paying more attention to the falling rig count and what it might do for oil prices than the current situation that continues see the glut grow.

April 30, 2015

Chart of the Week

Chart of the Week – The End of Cash?

Money velocity in its simplest terms is a measurement of how fast money is moving through the economy. Another way of looking it is that money velocity is simply a comparison between GDP and money supply. If money velocity is falling then that tells us money supply is increasing at a faster rate than GDP. (more)

April 26, 2015

Technical Commentary

This week…..

-          Nirvana has arrived in the US stock markets. The S&P 500 hit a new all-time high and so did the NASDAQ – 15 years later. Well high close anyway. The DJI and the DJT did not confirm with new highs. Maybe they will or maybe they won’t.

-          Bond prices were weak this past week but rebounded in the latter part of the week. The FOMC meets this week for the monthly interest rate decision. Watch the language.

-          Gold and silver fell miserably this past week although they remain above recent lows. The gold stocks were down but held relatively well. It is possible that gold remains in a corrective mode and if so it could be near the end of an ABC type move. Gold often shows weakness in the FOMC.

-          The US$ slipped this past week which makes gold falling all the more mysterious.

-          Oil prices were up again on Mid-East tensions. But supplies continue to build in the US even as the rig count keeps falling.

April 23, 2015

Chart of the Week

Chart of the WeekAre Biotech stocks in a bubble?

Are Biotech stocks in a bubble? This is a question that is being asked. According to an article by Bloomberg (Biotech Index in Nosebleed Territory – Up 500% In 4-years, Trades At 10X Revenues – Bloomberg Business, March 8, 2015) the 269 Biotech companies that are listed on the NASDAQ are up more than 500% in the past four years. The Biotech companies have the biggest weighting on the NASDAQ at 11.2%. (more)

April 21, 2015

Technical Commentary

This week….

-          Global stock markets succumbed to a slowing China, signs of a slowing US, falling US earnings and rising tensions in the Mid-East on Friday. Markets everywhere were falling with some Asian and European markets making new highs on the week then reversing to the downside and closing lower. If there was a bright spot it was energy stocks and even gold stocks that managed gains on the week.

-          US bond yields fell further this past week but rising oil prices helped push Cdn bond yields slightly higher. What drove the stock market lower helped push bond yields lower (bond prices higher as prices move inversely to yields). Economic numbers are suggesting a potential contraction for the US economy in Q1. Could the FOMC now be put on hold for an interest rate hike?

-          Both gold and silver were off slightly on the week but the gold stocks managed some small gains. The US$ Index was down on the week and that may help gold going forward. The US$ Index was falling because of the weak economic numbers being reported.

-          As tensions rose in the Mid-East oil prices rose. Oil was also higher because of a weaker US$. As well there are signs of slowing production in the US and the weekly build was lower than expected. But it is the Mid-East where the focus might shift as there were reports of Iranian ships headed for Yemen. A confrontation between Saudi Arabia and Iran could send oil prices soaring.

Chart of the Week

COTW – So why are the banks lagging?

The banking system is supposed to be the backbone of the economy is it not. Ok maybe not. Many tout small business as the backbone of the economy. That is most likely a myth as well. Big business helps create numerous small businesses so that would make big business the backbone of the economy. It is the financial and banking system that greases the economy. So one would think that the bank stocks would be amongst the strongest sectors on the NYSE. But the chart above of the PHLX KBW Bank Index appears to suggest that is not the case. The KBW Bank Index remains well below its highs of 2008. Over the past couple of years the KBW Bank Index appears to be caught in a sideways trading pattern as the internal indicators weaken. This suggests that the index could be poised for a fall. (more)

Previous Posts »