TV Talking Heads vs. Investing:

March 16th, 2017

ISLANDAs you know – many of the broader Global stock indices are at or close to all-time highs.

We at Getting Technical conclude that any attempt to time the market is a failed strategy and that investors who use fully invested longer term models do better than investors who over-trade or market time. A long time ago a wise investor told me that most technical analysts who ”time” the markets end up with the ass out of their pants.

I am continually upset with technical analysts who use seasonal recommendations to buy and sell and also the technical analyst who tells the TV viewers to act on top like patterns such as the head & shoulders, key reversals and now recently an island reversal formation. It is frustrating for an investor to buy low, sell high and then have to buy back in even higher.

Investors who use fully invested dominant theme models do better than investors who over-trade or market time and our focus will remain on the Global, TSX models and Dominant Theme investing.

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Long Term Market Cycles:

February 25th, 2017

COPPOCKThe Coppock Curve is rarely used today but according to Wikipedia the Coppock curve or Coppock indicator is a technical analysis indicator for long-term stock market investors created by E.S.C. Coppock, first published in Barron’s Magazine on October 15, 1962. The indicator is designed for use on a monthly time scale. It is the sum of a 14-month rate of change and 11-month rate of change, smoothed by a 10-period weighted moving average.

Coppock, the founder of Trendex Research in San Antonio, Texas, was an economist. He had been asked by the Episcopal Church to identify buying opportunities for long-term investors. He thought market downturns were like bereavements and required a period of mourning. He asked the church bishops how long that normally took for people, their answer was 11 to 14 months and so he used those periods in his calculation.

A buy signal is generated when the indicator is below zero and turns upwards from a trough. No sell signals are generated (that not being its design). The indicator is trend-following, and based on averages, so by its nature it doesn’t pick a market bottom, but rather shows when a rally has become established.

Coppock designed the indicator (originally called the “Trendex Model” for the S&P 500 index, and it has been applied to similar stock indexes like the Dow Jones Industrial Average. It is not regarded as well-suited to commodity markets, since bottoms there are more rounded than the spike lows found in stocks.    .

Strategy – Investors should remain fully invested during a “buy” and then go to a 10 to 15% cash position during a “sell” signal. The last “buy” on the TSX60 was signalled in April, 2016 at 20.54 on the index.

 

 

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Most market timers are out of time:

February 14th, 2017

TSX60As you know – many of the broader Global stock indices are at or close to all-time highs. We at Getting Technical conclude that any attempt to time the market is a failed strategy. Investors who use fully invested longer term models do better than investors who over-trade or market time. Investors who use fully invested dominant theme models do better than investors who over-trade or market time. Our focus will remain on the Global, TSX models and Dominant Theme investing

At Getting Technical our historical market studies dictate that bear markets print a lower low within a rolling 26 to 30 week time window. The TSX timing model displayed is based on a simple 26 week price channel.

Strategy – Investors should remain fully invested during a “buy” and then go to a 10 to 15% cash position during a “sell” signal. The last “buy” on the TSX60 (23.49) was signaled on May 27, 2016 at 20.82 on the index.

 

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What is going on?

January 30th, 2017

MDII see last week I see most of the base metal miners (to include Cameco) all trading at or close to new 52-week highs.

Some of the names – Capstone Mining, First Quantum, Hudbay Minerals, Lundin Mining and Teck Resources. We know there is no exchange traded fund for this small group and we know the TSX has dropped the Mines & Metals Index – so we need a clone or proxy to participate

I note that when I was on BNN Market Call Last June with MDI at $7.01 a said – “This is basically the canary in the mineshaft for the mining space. The miners have done really well, so this is the major way to play the recovery and resurgence of interest in the mining sector.”

Since then – not one quest has mentioned the name

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What is with Info-Tech?

September 24th, 2016

xitI see last week the TSX listed iShares S&P/TSX Info Tech ETF (XIT) traded up to close at perhaps an all-time high. The XIT, according to the manager – seeks long-term capital growth by replicating the performance of the S&P/TSX Capped Information Technology Index, net of expenses.

 

Years ago the sector (index) was dominated by Nortel – now the sector is capped and has matured and broadened out to hold about 20 names to include the likes of CGI GROUP INC (GIB.A), CONSTELLATION SOFTWARE INC. (CSU), OPEN TEXT CORP (OTC), BLACKBERRY LTD (BB) and DH CORP (DH).

Technically we know the technology sector is economy sensitive and so the current strength of the XIT is very bullish for the broader markets. Our chart is the weekly bars of the XIT – with the related 40 week simple moving average – plotted above the TSX 60 Index – in this case the clone iShares (XIU).

Note the price is above a rising 40-wk MA. The lower study is a ratio, or spread smoothed by a 20-week simple moving average. Note the out perform through 2014 and 2015 – a short under perform and now the recent return to out perform.

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