With the concern about the Brexit vote, this could be a wild week. There are lots of moving parts with the Vix Options Expiration on Wednesday, the quad witching for options on Friday, the Fed, the breakdown in European financials, the breakdown in the Asian charts this morning, and crude oil stalling around the $50 level. With all of that, its not a surprise that the Utilities and Consumer Staples continue to perform well.
Boralex (BLX.TO) leads the Utilities sector right now.
TransAlta Corp. (TA.TO) looks more like the early stages of the breakout in Boralex. The momentum shown on the MACD seems to be waning a little for TransAlta.
Innergex (INE.TO) has really performed well. If it drifted back a bit here, it wouldn't be too concerning. They also pay out a quarterly dividend stream which is quite attractive.
Northland Power (NPI.TO) has also had a nice run. With a solid yield, the stock continues to perform.
Atco (ACO/X.TO) looks pretty interesting here. New 1-year relative strength highs will bring more focus to Atco. It seems to have run a lot already, but the other utilities continue to be bought as well.
TransAlta Renewables (RNW.TO) chart is shining as the new highs above $12.15 are looking good. A pullback to $12.25 wouldn't be all bad if it bounces off that. Perhaps I have drawn the trendline a little tight, but there appears to be lots of latitude to set up a rising channel here. A yield of 6.5% that has been increasing, has the potential to draw in some more investment.
The Canadian Utilities (CU.TO) chart continues to look great. As it breaks out to new 1 year highs, with a pretty good dividend, this will probably behave well throughout the summer. I like when the SCTR goes above 75 and we are testing that level right now.
Capital Power (CPX.TO) is listed as a gas utility, but the chart is particularly nice here. The SCTR has moved above 75. The relative strength is at new 3-month highs. The MACD has just pushed to highs for the chart. That is bullish but it might relax over the next few weeks and give a better entry closer to the 6-month breakout line. The 7.5 % yield looks pretty compelling.
I'll be covering a lot of these utility-type stocks on Tuesday's edition of The Canadian Technician Webinar 2016-06-14. As we head towards what could be a volatile summer, filled with political swings, this might be a nice area to ride out the volatility. To understand the importance of Quad Witching Options Expiration, which occurs on Friday, I will be discussing that event on both webinars this week. You can look for the recordings after the dates by clicking on this link to get to the StockCharts Webinar Archives.
One chart I want to continue to draw attention to is the Nikkei ($NIKK). I think the chart is an important part of the global scene, which just adds to the messy global picture. After both Kuroda and Abe have commented about a weakening situation, we continue to see the Japanese chart detiorate. As the world's third largest economy, I am always concerned about its underlying strength. Having both the central banker and the Prime Minister openly discuss weakness, makes me more uncomfortable. If anything was to tilt to a major break in world markets, I would lean toward Japan.
All that to say, there is a lot to look at. I hope you can join me for some very important webinars this week. I like to tweet on Twitter, so feel free to follow me @Schnellinvestor. I think it is probably timely to give a shoutout to an 18-Year Old Canadian LPGA Champion! Brooke Henderson!!!
Good trading,
Greg Schnell, CMT, MFTA.
