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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Are you a Bull or a Bear?

August 31st, 2016

GSOBVTechnically a picture is worth a thousand words –certainly worth more than a compelling story. It is that compelling story that keeps us in a losing investment – long after the picture looks bad.

Technically we know the financial stocks lead the broader equity markets and finally the best technical indicator is the very long term primary trend line. So all the technician needs is a long term bar chart – monthly bars – a semi-log scale and a straight edge

The lower study is the old reliable Joseph E. Grandville On-Balance-Volume (OBV)

The plot of 10+ years of Goldman (GS) tells it all.

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Popular torpedo stocks:

August 12th, 2016

VRX2According to BNN the shares of Concordia International tumbled six per cent on Friday after the company replaced its chief financial officer and slashed its outlook

Most technical analysts I know were not surprised – visit comments on Stockchace.com

Stockchase.com 2015-05-22             COMMENT – Bill Carrigan re Concordia Healthcare Stock Symbol: CXR-T ($83.70) “Chart shows a long run up with a sort of spiked top. Thinks these types of companies are overcrowded trades. They are driven by promises with great stories. He would just avoid it unless you are a trader.”

Stockchase.com 2016-03-24             DON’T BUY – Bill Carrigan re Valeant Pharmaceuticals Stock Symbol: VRX-T ($41.20) “There is a technical rule on spikes. There is a head and shoulders pattern suggesting downside is on the way.  Usually it takes 2 or 3 years to correct the damage.  Does the price lead the fundamentals? He can show you that they were in trouble before the last torpedo. The technicians knew the 50% sell off was coming.  In many cases you cannot avoid them. This was a case where you could avoid it.”

The technical rule on torpedoes is that in many cases you can’t predict them (Potash) but some are preceded by warnings – such as an over-loved story that has broken down below the important 40-wk moving average – the other rule is to never invest following the torpedo – it takes up to three years to repair the story

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Stupid cheap for a reason?

August 11th, 2016

TSBA few weeks ago analyst John Zechner selected TorStar (TS.B) $1.56 as a top pick – ”this is just a pure value pick. It’s not that he likes management or the industry. It has a market capitalization of about $120 million. There is net cash of about 60. There is an enterprise value of about $60-$70 billion. Dividend yield of 16.56%. Stupidly cheap.”

Now there are a number of annoying buzz words I flee from – and one of them is cheap – I have always lost money on “cheap” stocks.

Technically the stock has a history of long bears and short bull phases.

Fundamentally the company has three paths to follow. The controlling shareholders could take the company private, or they could sell the company or – they could press on and take the stock to penny stock status. Eventually most penny stocks get delisted – a sad end to a once great enterprise.

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Watch the U.S. Financials:

August 5th, 2016

XLFDJust to refresh – the term Bellwether – was derived from the Middle English Bellwether which refers to the practice of placing a bell around the neck of a castrated ram – (a wether) in order that this animal might lead its flock of sheep. Just to refresh – no bull market can operate without the leadership – or participation from the financial sector.

Just to refresh – on the bullish inverse head & shoulder (H&S) formation. Bigger is better – so yes a daily bar an inverse H&S is good – but a larger weekly bar inverse H&S is better. Also the first or left shoulder should be longer in duration than the right shoulder and the volume is usually greater on the left shoulder – sometimes the head has the most volume but never the most volume on the right shoulder.

XLFWTwo charts today – a daily bar of the SPDR Financial (XLF) displaying a small inverse H&S and a weekly bar of the SPDR Financial (XLF) displaying a large inverse H&S – clearly very bullish for the broader U.S. equity markets.

 

 

 

 

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