The Canadian Technician

15 Charts For All Investors Creating Serious Tension For August

Today I want to zoom into the currency wars. The equities seem to be the foot soldiers for currency wars. If central bank action/ fiscal policy can get the currency low enough, you can stimulate economic activity. I'll start the explanation between Canada and the US to make the concept clear and then broaden it out globally. Last week we hit 11 year lows on the Canadian currency. Yes, lows from long before the financial crisis. Think about the seriousness of the Financial crisis and now currencies are taking out the 2009 lows. Something big is going on. The Canadian Loonie has plummeted 29 cents in three years and we just had back to back negative GDP quarters. How can the USA be doing so well without us participating? So much for stimulating the economy with a low dollar. What is up with that? Since the end of 2014, the Canadian buck is down close to $0.10 which is remarkable as one of America's major suppliers. While I agree the US Dollar can be strong, Canada's manufacturers should have been finding huge opportunity with the big swing. 

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Today's Webinar Has A Big Message - Don't Miss It

In my review of the charts today, there are some critical messages showing up. I plan to review these on today's webinar and post the charts on the Market Roundup Blog. 

This chart is a start of the message. 

You can register by following this link. Market Roundup Live.

We kick off the action at 4:30 EDT. If you don't get the chance to watch it live, the link for the recording will be on the StockCharts.com home page under the What's New Section.

Good trading,
Greg Schnell, CMT

The $TSX Tries To Find Support

The Toronto Stock Exchange ($TSX) is struggling to hold above the long term trend lines. The chart below shows the last 19 years on the $TSX. After major uptrends, the market broke through the 3 blue lines and rolled over. In 2008 it went on an energy resurgence and popped to new highs before making a final turn down. In the current market, we can see that the blue trend line is well represented with lots of touches over the past 4 years. There is also a red trend line that shows the extreme market lows and investors may wish to wait for the breakdown on this line. That line is under pressure this week and it seems to be breaking down with the renewed selling in commodities. We can see the purple SPURS are breaking down and the $TSX continues to underperform the US market.

The one indicator shown in the bottom panel is one that I have been associating with a market top. What it shows is the increase in the weekly volatility. We can see the elevated levels on the Average True Range (ATR) are usually bearish. The recent spike up (OCT 2014) and pull back mean the weekly swings are above normal. Should this continue, I would be very cautious and I would suggest that the $TSX could accelerate to the downside if this trend line does not hold. 

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If Gamblers Stop Playing The Shanghai Market, Are They Headed Back To Macau?

One of the reasons that the gambling in Macau slowed down was the entire gambling crowd had become traders and they were participating in the euphoria of the stock market. Retail accounts for trading were opening at an astronomical rate like a million/ week or something in that stratosphere. Macau was also going quiet as the Chinese government frowned on the gambling industry. 

So the question is whether or not the gamblers return to Macau. I have a few charts related to the gambling industry and I have assembled them in a chartlist called Gambling. These industry specific lists can be helpful when you are looking for trend. You can also work through the Sector Summary tool on the home page.

Lets start with the most vocal stock in the group, Wynn Resorts. Wynn has no new breakouts here in price, but the SPURS shown in purple recently broke an 8 month downtrend. The $110-$120 are will be important with the gap at $120. But the soaring volume recently suggests some buyers are showing up for work. The MACD looks ready to run. The thick blue line represents previous resistance in momentum. Watch closely. The SCTR is very very weak.


Chart 1

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5 Charts To Chill The Heat

The markets are at or near all time highs. The optimism is overwhelming. Consumer confidence just roared in with a triple digit positive reading of 104 and this is only the third time in history the confidence has been so high. What's not to like? Breadth is an important feature of technical analysis as it ranks how many stocks are participating. Greg Morris has written entire books on breadth, so I won't attempt to cover it all off in one blog. So what is breadth? Breadth measurements help us understand how many participants out of a group of stocks are involved. The old joke about 6 workers leaning on a shovel and watching while one worker digs a trench is a good analogy. The lack of participation means it will be a long time before the trench is finished because not a lot of people are helping.

In the equity markets, we can use groups like the S&P 500 to measure the big caps or groups like the NYSE Composite which includes all the listings on the New York Stock Exchange. To keep it simple, I will use two examples of breadth. One is the percentage of stocks on a buy signal on a PnF chart which are called Bullish Percents. More information on Bullish Percents can be found on this link to the Chartschool article. Bullish Percent Indexes. The other is the number of stocks above or below a moving average. In this case we'll use the long term average of 200 days. The indicator is specific to each group and the $SPX indicator is $SPXA200R. (The percent of stocks above the 200 DMA).

In the top panel, there are two things going on. One is the value (price) of the $SPX shaded in grey. The other is the Bullish Percent Index. When the market is above 65 it has lots of breadth and moves higher. Markets above 75 have lots of breadth with more than 75% of the stocks pushing higher. One of the issues on the chart below is the downward dotted line where every rally has less and less stocks returning to buying signals after pulling back. The current reading is marked by the lime green line. If we look left on the chart, the major declines occur when the market cannot rally back above 65. Those are the areas to worry about. Recently our rallies back up to 75 were ok, but the $SPX has waddled sideways since the beginning of the year. Not enough participation to make meaningful new highs.


Chart 1

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A Review Of The Canadian Banks

This article follows on from a look at the US Banks. The Canadian banks don't look anywhere near as bullish. Most of these charts need lines to show where support is reaching a rather critical stage. First we'll start with the RBC or Royal Bank. RY in USD terms. The Canadian chart looks as bad at RY.TO but I'll stay in USD to be consistent with the other article.

RBC (RY) is building a multi year topping structure with the 40 WMA pointing down. The SPURS in purple are declining and the SCTR rank puts RBC in the bottom quartile.

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A Review Of US Banking Stocks

Recently the US banks have been soaring like they are drinking some kind of Kool-Aid. JP Morgan (JPM), Citigroup (C), Bank Of America (BAC), Wells Fargo (WFC), US Bankcorp (USB) have all been surging higher. Goldman Sachs (GS) and Morgan Stanley (MS) have followed. Time to do a little competitive comparison as I see the building names on the skyline here in London.

Starting with the grand daddy, JP Morgan (JPM). The purple SPURS is soaring to new heights. the SCTR has been above 75 the longest since 2013. Bullish!

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A Complete Review Of Smoking Hot Cyber Security Stocks (MUST LOOK!)

Wow, is this Cyber Security Industry group on fire. What a hot looking group of charts! I had dinner last night with some risk management (Cyber Security) specialists. It motivated me to go check out the charts. Maybe they'll check out my article! I did find a listing of 25 companies to be watching for Cyber Security in 2015.  While I wouldn't buy  willy-nilly... some of these have beautiful charts. Here is the link to the top 25 to watch article I used to make my list. Cyber Security (Top 25). Some companies are not public.


First of all, let's start with the ETF covering the group, HACK. New highs every week, what's not to like about that!

In the order they came out in the ChartList, next is AVG. Looks like a Top Gun Movie....Going Ballistic!

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Manulife (MFC.TO, MFC) and Sunlife (SLF.TO, SLF) Make 52 Week Highs

Manulife has been performing well since the Fed keeps talking up the potential for them to consider raising interest rates if inflation picks up. Manulife (MFC.TO, MFC) has been shining for a while but it picked up speed recently. The SCTR for the Canadian listing is up around 83 which is excellent. The stock is enjoying a clear breakout. 

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10 Oil Majors Charts You Have To See


I picked 10 Oil Majors to review this week as June 13 marks one year since the decline in oil prices started. I think these charts are important as they do a strong job of representing the oil industry and investor sentiment towards the group. The oil industry had been responsible for 1/3 of the capital spending in 2014 across the S&P 500 and the oil majors are obviously key in that. While many of the companies reduced their 2015 spending by 10-30%, the knock on effects of that slowdown rippled across transportation, utilities, steel, valve manufacturers, data control systems, pipe layers, engineering firms, construction companies, vehicle sales and equipment sales, just to name a few. I recently did a webinar on Thursday, that went into depth on some of the main commodities and the deflationary threats that appear to be showing up. That webinar can be found by clicking this link. 20150604 Market Round Up Live.

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