The Canadian Technician

Check out the RRG charts for the Canadian Sectors

The RRG Charts are going to be part of Thursday's webinar. The value of these charts is unbelievable. Here is a sample of the Canadian Sectors RRG Chart.

The $TSX is the benchmark in the box above the green area of the chart. So it is the average. That means the Energy and Materials have sold off so hard, that they can balance the other 2/3's of the index weighting. The table below the rotational chart shows you the ticker name and the detailed name of the sector. The Utilities are about to accelerate into the positive momentum and positive relative strength so they might be a sector to drill into.

Here is the link to the live chart.

Based on this chart it is still way too early to look for success in the energy and gold sectors. 

Now let's compare it to the $SPX in Chart 2. Here is the link.  Notice a few major things. Financials, Consumer Discretionary, Industrial are all losing momentum (because they are moving down) and losing relative strength (because they are moving from the right towards the left). When they start to under perform both in terms of momentum and relative strength that is an important time. So the only sector with improving momentum is the Utilities and the relative strength is also improving on the Utilities but the $SPX is still outperforming so this appears to the left of centre. The Technology, Health Care and Consumer Staples are losing momentum( moving down)  but they are still outperforming the $SPX (Moving to the right). 

I spent a few hours with Julius De Kempenaar in Amsterdam and I plan on demonstrating some of my analysis on how I would use this to help pick stronger areas of the market.

So for the webinar tomorrow afternoon, we would love to have you attend. You can Click Here To Register. Please click to register only if you are attending live. You do not have to register to watch the webinar later.

The start time for the webinar will be Thursday October 30 at 4:30 EDT, 1:30 PDT.

It will be posted on  the lower part of the home page for viewing afterward. See the example below. Notice the last line.

Good trading,
Greg Schnell, CMT

 

$NATGAS Fails To Stay Above Support

It seems Natural Gas ($NATGAS) is failing. It really needed to hold $3.72. I spoke about it in the webinar but it continues to break down.

Investors in the Natural Gas stocks that were looking for a bounce like I was have been disappointed.  We will have to wait for a better signal.

Good trading,
Greg Schnell, CMT

 

Oil Stocks Bounce..But Wait..There's One More Thing..

The Canadian oil stocks have been traumatized by the recent plunge in crude. If you like to take advantage of deep pullbacks in price, these charts have been severely hit. This was just a screen shot of the most actives from the home page $TSX hot box. 

How else can we hunt for great stocks after this pullback? Well, the SCTR is a great place to look. Some of these stocks are already back in the top quartile of Canadian stocks. The last column is the SCTR ranking.

Even if you just want to find all the oil and gas producers, you can click on the SCTR report button on the home page, select Toronto stocks in the drop down menu at the top,  click on the SCTR column heading to make sure the 99% ones are at the top, then click on industry. You can scroll down and see any industry with the stocks in SCTR ranking order. You can use the same list with gold miners as an example. I posted a strong list of high SCTR rated gold miners in the Market Roundup yesterday. Here is the same posting, in case you missed it.

With the push off the recent lows, I will try to highlight some great looking industry groups and high SCTR rankings on the weekly webinar that will be on Friday this week. October 24th, 4:30 EST. Click here to register.

I also wanted to take a minute to point out some fantastic Technical Analysis events coming up in Canada in the next few weeks. If you register soon, it will make a difference for your pricing and helps the organizer line up food and room arrangements. I sit on the board of the Canadian Society of Technical Analysts in Canada. This is a shout out for a major meeting coming up in November that I am one of the key organizers for. We are hosting a simulcast meeting at 5 locations across Canada with remote and on site presenters all day Saturday November 8th. If you are interested, you can follow this link for way more information. Two world class authors will do a National presentation and each location will have on site presenters for the rest of the day. It is the annual national meeting for CSTA members and newcomers. 

As well, I was in London for the IFTA conference. Chatting with Alex Elder, he mentioned he was doing a one day seminar in Toronto on November 9. He only had 3 spots left, the last I talked to him. You can find more information on his web page at Elder.com. Click here for the Link to the Toronto meeting. I use the Elder Impulse system candles on StockCharts.com all the time. They add strength to the presentation of information and clarity to changes in momentum. I also saw his newest book in London which is a major rewrite of his most famous work, Trading For A Living. The new version is called ...you guessed it...The New Trading For A Living. Here is a photo of Chip receiving a copy from Alex in London.  

PS. You will be able to get Alex's book at the StockCharts.com bookstore as we should have it in stock over the next few weeks. 

As the market rebounds with conviction here, there are some fast moving stocks. Using the SCTR rankings can really help you pick strong stocks in different industry groups and sectors. Hopefully you'll join me on a walk through the strong sectors, industries and stocks on Friday's webinar.

Good trading,
Greg Schnell, CMT

 

 

 

Is IBM A Big Blue Bubble Or Is Tech In Techno Trouble

Listening to the news is always a bad way to decide what is really going on. However, today offered more. IBM announced earnings that were considered lacklustre. When you miss revenue by a b-b-billion dollars, somebody notices these small changes!

So I had seen a comment that SAP missed earlier in the day and then IBM missed and it started to make me ponder. Well, I wasn't exactly going to pull out 30 tech companies earnings reports to see what was going on. A picture is worth a 1000 words so lets go to the technical museum of fine art, the charts.

Here is IBM (IBM). Remember today it opened in the high 160's. I have marked the generous zone of support in red. Regardless of the Zone of support, the trend line is as generous as possible. There is only one other trend line and that is horizontal. You can see the SCTR has suggested avoiding the stock for almost 3 full years now. The green area is top quartile performance. It has not been there in three years. IBM has been buying back stock rather than doing acquisitions. 

So IBM is a firm that consults to many of the worlds largest companies. Who else does that? Well ORCL is a big financial systems provider for enterprise wide software.

Here is a chart I posted a month ago in the Subscribers blogs for the Market Roundup with Martin Pring.(20140919) Market Roundup  Oracle had under performed the S&P 500 ($SPX) for quite a while ...when Larry Ellison stepped down. Hummm, thats odd. We also had a chart of SAP in the same Market Roundup but more on that later.

Well, here is the chart of Oracle (ORCL) with the SCTR and the SPURS or purple relative strength area at the top.We can see the stock has not been able to keep up with the $SPX in purple. We can see the SCTR ranking really started to drop in June when the highs were put in.

So here is the SAP Software (SAP) company chart. They just did a big acquisition. Hum, that was an Oracle strategy for continuing the revenue growth. SAP bought Concur Technologies the week the $SPX topped at 2019.

Here it is in the same view for SAP with the same settings. Under performing the $SPX and the SCTR is very low. The 5 year trend line is broken. 

When I looked at Amazon (AMZN) which is also a large cloud company, here is what showed up. Same traits.

Here is Google (GOOGL). Same trait. Just recently broke the long trend line on outperformance compared to the $SPX. Look at the negative divergence on the MACD relative to the price. Double top in price, huge loss of momentum on the MACD.

 

Here is Adobe (ADBE). I have been weary about their ability to produce gains for a long time. They kept proving me wrong. Today, this shows up in the charts.

Okay, I have left room for a little optimism.  Here is Microsoft (MSFT). Chart looks great. Be cautious on it starting to under perform the $SPX here. There seems to be a trend in the charts above that should infect MSFT at some point.

Lastly, Apple. While not a big industry cloud provider, definitely a leader in the XLK.

So, when I scan these charts, I get very worried about the broader trend in large cap tech. You should be able to click on these charts and see the settings. You can check out ASML, INTC, CSCO, QCOM, MU, PCLN, EXPE, EBAY, NFLX,P and see what you think. Looking at this list of charts would suggest to me being long the XLK without protection close below( Stops, Puts etc) is ignoring some very weak looking major charts. Lastly, it looks like SAP, IBM and ORCL are finding it very difficult to keep growing revenue and bottom line profits. But that is my view based on the charts, not the earnings calls. We'll know in the months ahead if this trend continues.

Good trading,
Greg Schnell, CMT

 

Energy Stocks Shoot Up Like Oil From A New Well

The energy stocks have been deeply oversold. I have mentioned them in the webinars and then spoke specifically about Cenovus (CVE.TO) coming down to support. Well, the broader energy sector is also rebounding looking at the Canadian Energy Sector ( $SPTEN) chart. If Investors were trying to buy the dip, this one has been a deep one.  It's like the dip we all want the Chocolate Dipped Ice Cream cone to get at our Ice Cream store.

This has been very oversold and the bounce is already back at the 50 DMA. I would expect the sector to try to bounce up to the 200 DMA over the next few weeks and then we'll see how the momentum holds up.

For now, it's like a roughneck getting soaked in oil on a drilling rig floor! Volatility is big coming off the lows, so this might not be a straight shot up. Caution is warranted.

If anyone hasn't seen yesterday's webinar, here is the link. Thursday October 16, 2014. Next weeks webinar will be on Friday October 24th.

Good trading,
Greg Schnell, CMT 

 

The Canadian Dollar Sets Sail For Lower Levels $CDW

The Canadian Dollar ($CDW)  is considered a commodity currency. We all know that. Here is a current chart over a 15 year period.  It would also indicate that the price of the Canadian currency leads/tracks/follows crude oil. In some instances like 2007, the currency topped first and the oil topped 6 months later. In 1999 oil bottomed before the currency made a final bottom in early January 2002. That period in 2002 also marked the top of the $USD back then.


Chart 1

Lets look at the performance of the Canadian currency with other commodity currencies on chart 2. You may remember the commodity high in 2011. These currencies are all compared to the $USD which is greyed out in the top left of the screen. So the $USD is flat at 0%. But we can see the currencies have all fallen since 2011. The Kiwi shown in Kiwi green held up but recently plummeted losing 20% in the last 6 months! So this makes it pretty clear that the currencies are a reflection of commodity demand which has been tepid for almost 4 years.


Chart 2

Let's bring in another copy of the top chart now so you don't have to flip around and study the larger implications of the Canadian Loonie diving. The major implications of this Canadian Dollar trend in Chart 3 are broad. The currency has been telling us for 2 years that all is not well in the commodity arena. Whether you pick the Canadian or one of the four shown above, they all look the same. So regardless of government policy taxing the mines in Australia, the Brazilian elections or the Canadian management of the current economy, they all point to the same result. Lower values.


Chart 3

But look how much oil has not dropped compared to the currency on the chart above.  If we use the black line which just happens to line up with the currency on this chart it shows as an area of support for the currency scale as well. We can see the breakdown of that area (red crossing below the black trend line) in 2013. So 1.5 years later, the currency is still falling through more and more levels. The currency has broken a major solid red trend line and if you use the trend line of the 2009 extreme low it has snapped through that as well. I have used the lowest slope  on the black line to show the trend in the price of $WTIC and it has broken down also. The price of crude has recently broken down through the long up trend from the 1999-2009 low as I have shown on the webinar series. I was really starting to wonder if the $TSX was calculating right in September when it kept climbing to higher highs and the oil and mining stocks were falling. It would appear everyone kept crowding into what was still working (Think the Canadian Banks) and kept a safe harbour there. Well not really. The Canadian stock market has lost 1700 points in 27 trading days as shown in Chart 4 below.


Chart 4

Trends usually stay in place for a while and this has just begun. The down momentum has to slow before it can reverse.  We have not started to show positive divergences or any end of trend indicators.  We'll probably hit a Demark Sequence count soon that says it is due for a bounce. I am now in the camp that so many things are structurally broken at the same time that we are in a whole new market and sideways or lower are the primary directions. I think bullish is off the table until some major trend setups start to show the potential for moves the other way. The currency charts tell me now, not to hope for much yet. Maybe the Canadian dollar can bounce off the 85 level. There was some support there in 2007 and resistance in 2008. It kept holding the dollar down there until it finally broke out. Then it popped like a balloon under water shooting up from the 85 level to 100 inside a year. If the dollar looks weak going past 85, it wouldn't take much imagination to see a move to 77.50.

Below is a weekly chart with the $TSX. The red vertical lines indicate some of the more major tops on the $TSX. Below the Index is a black histogram area that keeps track of the percentage (%) of stocks above the 200 DMA($TSXA200R) or 40 WMA. Today there is less than 30% of the $TSX composite above the long term average. Two thirds of the large Canadian companies are below the 200 DMA.  This is the most sudden drop from 70 to 30 that we can see on the black histograms. It was almost instantaneous. If you think about the 2007 lows it took time to bottom ( ; |  ok 2 years ) but there was a rally that went onto higher highs. In 2011, the pullback took months to base. 


Chart 5

Whether you use the currency, the price of crude, the collapsing breadth of the bulls on the $TSX, the recent 10.8% pullback has been stifling in its quickness. None of us know the future, but a bounce here could probably be used to lighten long positions until we get some better overall picture. Globally, a list of stock indexes have crossed into major trouble areas. It is only mid month and the charts I use to gauge that are monthly so we will have to wait for month end. Who is on that list? Australia,Korea, Russia, United Kingdom, Germany, France and the Russell 2000 Index in the USA. Very close to the fine line is Spain, Italy, Japan, Hong Kong and Canada. When the world turns bearish as a unit, that created pretty clear signals in 2000, 2007 and 2011.

All that to say the market bed we slept in in August is different than the bed the market is currently making in my view. Canada has been pulling back for 6 weeks. I think the current chart climate could make trading range trades the way to keep long term capital if only 30% of the stocks are in bull trends (above the 200 DMA).

We will be doing the Canadian Technician Live Webinar,  Thursday, October 16th at 4:30 PM EST . For attending the next webinar free, Please click here to register. The feedback from the last 2 have been great. Hope to see you there. They are filled with timely market information  as well as helpful tips and steps to use the website. You can see the previous one here for about one week from the date (October 9, 2014).

Good trading,
Greg Schnell, CMT

Cenovus Returns To The Bottom Of The Reservoir - Webinar Information for 20141009

Cenovus (CVE.TO) has been a hard stock for shareholders. The company continues to show so much promise, but the price just keeps getting pushed back down.

Everything on this chart says down. The horizontal support line says interesting. The price of crude says to be wary of anything spooky and black in October 2014. But this $27.50 level has been a solid support zone for 4 years. This is definitely a chart to watch, with a corner of the eye watching crude oil as well. A bounce here will be a brilliant, solid entry. A failure to bounce here puts the all time lows in play.

Crude is also testing some extremely important areas today. I will be hosting my regular Thursday webinar today at 4:30 EST (October 9, 2014).  Click here to register to attend this afternoon's seminar. The Canadian Technician Live Webinar. This link will only work before the event today.

I plan on covering off :

  1. the global view of the world markets
  2. the situation on crude oil and oil related stocks
  3. An education session on using the $SPXA50R indicator as a follow on to last weeks $SPXA200R discussion.

Looking forward to catching up virtually, this afternoon.
Greg Schnell, CMT

StockCharts.com Adds A Wide Complement Of Major Currency Pairs

In July, one of the biggest currency moves started and dominated inter-market relationships. When the $USD broke out, a lot of major changes happened in the market. As an example, all of the commodities have been crushed and have broken through major long term trend lines.

Well, today, StockCharts.com will be carrying many of the major currency pairs. This will be very important in helping us assess changing market conditions. Here is a list of the new pairs.

Continue reading "StockCharts.com Adds A Wide Complement Of Major Currency Pairs" »

$NIKK Tries To Hold Breakout - Replay Link for Thursday's Webinar

I have been very interested to watch the Japanese Equity Market ($NIKK) to see if it can hold the breakout from the 25 year trend line. First of all, here is a long chart.

Why does this matter? When a long trend line breaks it is usually very important. Lets zoom in on the last year.

Continue reading "$NIKK Tries To Hold Breakout - Replay Link for Thursday's Webinar " »

The Exx ETFs broadly test the 200 DMA

The world of business is global. Today, I was paging through my chartlists and noticed almost every iShares ETF is at or below the 200 DMA. Some of this is the strength of the US Dollar, but broadly speaking, the investing community is discounting these country specific ETF's. More importantly, they continue to make lower lows and lower highs which is the definition of a down trend.

When I go to the country specific stock market indexes it does not look this weak. However, here is an important part of the big picture. The Dow Jones Global Index ($DJW)

We can see in the upper pane, that it has under performed the  $SPX. However, the main takeaway for this chart is the critical place on the charts today. We can see the blue lines represent strong uptrends. Until this recent pullback, the bottom trend line contained all spike lows. This test of the 200 DMA is now below the trend line. To me this blogs key takeaway is the global weakness. IF the S&P 500 companies are global, we should start to see it in the october earnings reports.

If everything is under the 200 DMA in $US Dollar terms, it is usually a problem.The next four weeks will give us earnings information. The double tops on a lot of these charts mark concern for me, or the group generally sitting on 200 DMA tests while the US market is so close to the recent market top makes me concerned about the broader picture. 

Trade carefully, but this looks like the sort of global pressure that will pull the S&P 500 down to  its 200 DMA. Maybe the 200 DMA holds on the global index shown above on $DJW. There are a lot of critical chart levels being tested currently. This is an important time to be protected. I would expect a major bounce the first time the $SPX tests the 200 DMA.

I will be doing another Webinar this Thursday at 4:30 EDT/1:30 PDT. Hope you can can join me. I will post the link to the live webinar on this blog (the Canadian Technician) on Thursday. I will also be presenting the Market Roundup video on Thursday. If you are a subscriber you can catch that on the Market Roundup Blog. Hopefully you are enjoying the videos with commentary. The webinars should be even more interactive!

 

Good trading,
Greg Schnell, CMT

 

Other StockCharts Blogs

About The Author

Subscribe to this blog