The Canadian Technician

Moving Averages and Trend Lines Suggest ... Webinar Skim 2016-10-04

One thing we continue to use technical analysis for is the balance between emotion and the market. When the market is roaring, we need to be a part of it. We also need to be aware of when the market is in an exaggerated state. Conversely, when the market feels just horrible, it presents some of the best buying opportunities. Using technicals to help understand where we are in the market extremes is important. 

One of the indicators we use at StockCharts is the Bullish Percent Index. For more information on the Bullish Percent Index, click here for the ChartSchool Article. A simple 10 WMA captures most of the trends. One of the concerns now is the sell signal as the $BPTSE has broken below the 10-week moving average (10 WMA).

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Gold's Boat Doesn't Float (GLD)

Gold (GLD) was down hard today. This move was particularly important as GLD broke through support. Through the last eight months, GLD did not outperform the $SPX. The big push to new three-month lows does not suggest any strength showing up yet. Investors probably have some time, probably 2-3 weeks to look for gold names.

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Air Canada (AC.TO) Tries To Take Off

The Canadian transportation stocks rolled over on the back of the oil prices falling back in 2014. Most of the Canadian transportation stocks topped out in late 2014 to Mid 2015.  Air Canada (AC.TO) was no different. 

Currently this chart looks beautiful. The SCTR breaking out to 75 is my favorite signal. The price is breaking out to close the week, the month and the quarter. The volume acceleration is great and the MACD moving above zero on the weekly. Sweet!

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Answering Some Questions From ChartCon 2016

Well, ChartCon 2016 is over. I am sitting in the coffee bar with Arthur Hill this morning and we are discussing some of the ChartCon wrap-up details. Arthur provided a great presentation on systematic trading. I presented the SCTR with some little twists for people who might have seen the SCTR presentation before. Reading through the follow-up questions and comments, there are some great ideas on topics for blogs and webinars. I will endeavour to answer some of the feedback I received.

During my SCTR presentation, I commented about Valeant Pharmaceuticals (VRX.TO, VRX). One of the questions related to how the SCTR would help you get out of the stock in time to miss the huge slide that happened because of Hillary Clinton's comments about Valeant. So perhaps, we should discuss that in further detail.

Here is the chart of Valeant in Canada, however, the same price action exists in the US. As StockCharts increased the number of International stocks with an SCTR in 2014, that is when the US ticker symbol (VRX) started having an SCTR. For today's comments, I would like to use the longer time frame on the Canadian ticker.

Notice that for the most of the period shown, Valeant had a very strong SCTR, so this is the type of stock investors like to fall in love with. When it's working stay with it. That sounds like a good rule. As this is a weekly chart and the grid underneath is 3 months per line, this is a big winner for long periods of time. The first chart is simply the major primary uptrend with four smaller multi-quarter uptrends.

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Knight Therapeutics (GUD.TO) Breaks Out While The Market Pulls Back

Knight Therapeutics (GUD.TO) has been basing nicely over the last few years. Two weeks ago it broke out from the base. Last week it printed a very weak candle so the breakout was looking a little suspect. However, this week, it has continued to climb.

The Relative Strength compared to the $SPX is breaking out to new 52-week highs. With the SCTR breaking back above 75 as the stock breaks above former resistance, this looks pretty attractive. This means that the stock price is moving faster than 86% of the stocks in Canada right now.

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The Energy Stocks Go On Full Boil!

Finally, the positive pages are littered with oil and Natural Gas stocks! Not just showing up, but breaking out to new highs. Fred Flinstone was yelling Yabba-Dabba-Doo when this oil was being created in the reservoirs! This looks like another opportunity to be cheering along with Fred.

Seeing nice broad reaction to the inventory data this morning is rewarding in multiple ways. For those following these blogs and webinars over the past couple of months, we have been discussing why it is important that the energy stocks break out now. I will cover that off in full color on the Commodities Countdown Live Webinar 2016-09-08.

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Canada Is Try To Push Through - Webinar Skim 2016-09-06

Canada keeps inching higher but the progress has been slower lately. In 4 weeks, the $TSX was up 6 whole points from the last look at this chart on August 9th. The Bullish Percent Index is still in very solid breadth territory with 80% of the stocks on a buy signal. On the $TSX chart, you can see that this level has been important in the past as a support resistance level in 2014-2015 around the topping in oil and the Canadian rail stocks. The current $TSX price is  also the level at the oil price peak in 2008.

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Nuvo Research (NRI.TO) Breaks Above Year Long Resistance

With all the news about EpiPen recently, the pharmaceutical industry feels more like the needles-under-cuticles industry lately. Nuvo Pharmaceuticals (NRI.TO) seems to be bucking the trend with its products. In the middle of the EpiPen controversy, this stock is able to break out to new 52-week highs and also above a serious resistance level for the stock. I like the breakout here after creating higher lows and now popping through to new highs.

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Ballard Power (BLP.TO) Kicks In The Backup Power Supply

One of the beautiful things about technical analysis is it quickly evaluates a stock. Without a lot of debate, you can quickly understand a trend. Is it up or down? Well, this morning, Ballard (BLP.TO) crossed into one of my scans again. What used to be one of the high rolling stocks 15 years ago, is actually rising up after being in a long-term meltdown. I'll leave it to you to decide if you want to investigate a micro-cap stock of $350 Million, but it has a lot of interesting qualities that made it worthy of an article this morning.

We can see the stock has popped up many times before, but rarely did it last more than a few weeks. This stock has also had more failed starts than any investor would like to endure. Fool me once, it happens; fool me again and again, my bad. So if the reputation of delivery by management is in question, this stock has all the hallmarks of hype and no follow through technically. I will say that they have partnered with some of the largest firms in the world. The technology has promise, but it seems hard to deliver.

First of all, the SCTR has stayed above the 75 level for 4 weeks. The straight line in the middle of the SCTR is when the price / volume was so low the stock did not have an SCTR. We can see in the chart a surge above the downward trend in 2013. The surge lasted for almost a year. The stock exceeded it's breakout level by 6x before it was done within 9 months! Common in hot trends, a parabolic blowoff ensued. Now we can see another 2-year downtrend that did not return to the long-term low. What makes the stock more interesting now is the consolidation (bull flag) after breaking above the trend line. 

Lastly, I have only shown the last 10 years, but this used to be a $100 stock! Watching it wrestle around at the $3.00 level for most of the chart shown is really incredible. However, If you look at the MACD, you'll see the stock rarely has positive (above zero) momentum. The recent volume spike has follow-through volume and the MACD is rising. Other than the blow off top, the stock has not had a volume surge like it had in July 2016.

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