Monday, October 12, 2015

The Canadian dollar effect:

Two stock charts of interest using basic technical tools – a weekly of Canadian Tire (CTC.a) with a simple 40-week moving average and money flow – a variation of on-balance-volume. The other is a monthly of Cascades (CAS) using a long term trend line and the same money flow study

On the CTC.a chart we see a broken 40-week and money flow numbers declining since October 2014 and on the CAS chart we see a mid 2013 break up above a long term trend line and rising money flow numbers. I suspect the weak Canadian dollar is the prime driver of these two bull and bear studies.

Monday, September 28, 2015

They Don’t Usually Ring a Warning Bell

On a recent post – September 3 - I presented content sent to BNN Market Call last  August 6, 2015 -

“They Don’t Usually Ring a Warning Bell: Recent investors in the crowded spaces of the health care and consumer sectors tend to be weak holders and can stampede out of a sector when alarmed by any injury to one of the sector leaders. The current and alarming drop of Apple Inc. below its 200 day moving average has the financial media buzzing and for good reason. Apple is basically a consumer related company and has only violated the 200 day only three times since mid 2003.”
Today our chart is a daily bar of the Concordia Health (CXR) displaying the recent downward break of the 50 and 200 day (10&40-week) moving averages. A good example of investors fleeing from an over-crowded space. Shocking – the over-loved Concordia has lost one half of is market cap in four weeks – in turn trashing the health care sector. Look for the Volkswagen fiasco to replicate the Concordia torpedo and trash the auto stocks..

Thursday, September 24, 2015

Other bellwethers in trouble:

Back in August 28 I explained the term Bellwether – which was derived from the Middle English Bellwether which refers to the practice of placing a bell around the neck of a castrated ram - (a wether) in order that this animal might lead its flock of sheep.

Question – lead to where? Green pastures or to slaughter?

At the time Goldman Sachs (GS) at about $178 had broken down below the 50 and 200 day simple moving averages. Also relevant was the break below a 26-week price channel because Goldman tends to trend within a 6-month price window.

Now we have industrial bellwethers Boeing and Caterpillar trading below their related 50 and 200 day MA’s. Our chart is the weekly bar of a Canadian bellwether – Magna International (MG) breaking below 50&200 day (10&40 week) moving averages. You can also see that Magna has zero capital returns since the Aug 2014 peak. The time to buy the auto stocks is when the US auto sales are bleak like in 2008 when US auto sales were the worst since 1992 – (MG was trading under $10) - not now when the outlook is so bright you need sunglasses.