Technical action by S&P 500 stocks was bearish yesterday. Eight S&P 500 stocks broke resistance and eleven stocks broke support. Most of the weakness occurred late in the day on concerns that Bear Stearns has been forced to partially liquidate two mortgage funds that hold sub-prime mortgages. Interest sensitive stocks were notable on the list of stocks breaking support.
S&P 500 stocks breaking resistance
Stock Symbol Previous New
Trend Trend
Ben Franklin BEN Up Up
Comcast CMCSA Neutral Up
Deere DE Up Up
DirectTV DTV Neutral Up
Home Depot HD Neutral Up
Target TGT Neutral Up
Teradyne TER Up Up
TimeWarner TWX Neutral Up
S&P 500 stocks breaking support
Stock Symbol Previous New
Trend Trend
Boston Properties BXP Down Down
Burlington Northern BNI Up Down
Consolidated Edison ED Neutral Down
Convergys CVG Up Down
Darden DRI Up Neutral
Gannett GCI Down Down
Moody’s MCO Up Neutral
Office Depot ODP Up Down
Public Storage PSA Down Down
Sanmina SANM Neutral Down
Snap On Tools SNA Up Down
Technical action by TSX stocks also was bearish yesterday. No TSX stocks broke resistance and four stocks broke support.
TSX stocks breaking support
Stock Symbol Previous New
Trend Trend
CCL Industries CCL.B Up Down
Compton Petroleum CMT Up Neutral
Emergis EME Up Down
Nortel NT Up Neutral
Inter-day Comments for Wednesday June 20th
9:15 AM EDT: Home Depot is in the spotlight this morning. The company announced a massive $22.5 billion share repurchase program after the close yesterday. Some of the funds for the purchase will come from a recent sale of an asset valued at over $10 billion. Other funds will come from issue of debt. Home Depot has been the subject of takeover rumors in recent months. Home Depot’s moves are designed partially to counteract a possible takeover. HD is up about 6% in overnight trading. Strength in HD, a Dow Industrial stock has helped to lift Dow Jones Industrial Average futures before the opening.
On the charts, Home Depot has a mixed profile. Intermediate trend is neutral. The stock has been trading in a sideways trend during the past nine months. Short term momentum data is neutral.
Chart courtesy of StockCharts.com www.stockcharts.com
Calendar Second Quarter 2007 Consensus Earnings Estimates for the S&P/TSX 60 Companies
Consensus second quarter earnings earnings for TSX 60 companies have changed significantly since our last study on May 17th. Estimates were raised for twelve companies and lowered for eighteen companies. Average (median) gain on a year-over-year fell from 10.7% to 6.6%. Given recent strength in the Canadian Dollar estimates appear high. Many Canadian companies are producing in higher cost Canadian Dollars and selling at lower valued U.S. Dollars.
Following are consensus earnings estimates for the fiscal second quarter:
Company Quarter Second Quarter Consensus Second Changes
Earnings Reported Quarter 2007 EPS Since May 17
In 2006
Ace Aviation 2 $0.64 NA
Agnico Eagle 2 0.31* $0.31*
Agrium 2 1.06* 1.51* $(0.03)
Alcan 2 1.47* 1.68*
BMO 3 1.39 1.38 0.01
ScotiaBank 3 0.93 1.03 0.05
Barrick Gold 2 0.49* 0.40*
BCE 2 0.54 0.54
Biovail 2 0.50* 0.40* (0.01)
Bombardier 2 N/A NA
Brookfield 2 0.43* 0.25*
Cameco 2 0.21 0.46 0.07
Cdn. Imp.Bk. 3 1.70 1.95 (0.03)
Cdn.National 2 0.89 0.97 (0.05)
Cdn.Natural 2 0.96** 1.02
Cdn.Oil Sands 2 0.56 0.36
Cdn Pacific 2 0.87* 1.00*
Cdn. Tire 2 1.22 1.36 0.01
Celestica 2 0.13* 0.00*
Cognos 1 0.17* 0.25* (0.01)
Cott 2 0.18* 0.19*
Enbridge 2 0.35 0.35
Encana 2 0.98* 1.08* 0.04
FNX Mining 2 0.30 0.44
Fording Coal 2 1.03 0.69
Goldcorp 2 0.35* 0.20* (0.01)
Husky Energy 2 1.53 1.64 0.19
Imperial Oil 2 0.75* 0.74*
Ipsco 2 3.25* 2.72*
Kinross 2 0.19* 0.10*
Loblaw 2 0.70 0.62 0.04
Lundin Min. 2 N/A 0.43* (0.06)
Magna A 2 1.96* 1.81* 0.14
ManuLife 2 0.53* 0.62*
MDS 3 0.13 0.15* (0.03)
National Bk. 3 1.30 1.41 0.01
Nexen 2 0.69 0.58 0.02
Nortel 2 (0.20)* 0.09*
Nova Chem 2 0.68* 0.87*
Penn West 2 N/A 0.45* (0.01)
Petro-Can 2 0.93 1.31 (0.01)
Potash Corp. 2 0.57* 0.84*
Research in M 1 0.68* 1.06* 0.01
Rogers Com. 2 0.29** 0.31 (0.06)
Royal Bank 3 0.91 1.06
Shaw Com. 3 0.29 0.27 (0.11)
Shoppers 2 0.44 0.50
Sun Life 2 0.88 0.96
Suncor 2 1.64 0.98 (0.03)
Talisman 2 0.38 0.26 (0.04)
Teck B 2 1.48 1.26 0.06
Telus 2 1.02 0.83 (0.03)
Thomson 2 0.34* 0.36*
Tim Hortons 2 0.35* 0.33*
TD Bank 3** 1.21 1.40 0.06
TransAlta 2 0.16 0.14 (0.05)
TransCdaPipe 2 0.41 0.49 0.02
Weston 2 1.12 1.06 (0.03)
Yellow Pages 2 0.23 0.29
Yamana 2 0.05* 0.24*
NA: Not available
*U.S. Dollars
** Median company
Data sources: www.globeinvestor.com for Canadian dollar estimates and www.zacks.com for U.S. dollar estimates.
Third Quarter 2007 Consensus Earnings Estimates for S&P/TSX 60 Companies
Consensus third quarter earnings estimates also changed significantly. Estimates rose for twelve companies and fell for 18 companies. Average (median) estimate rose from 7.1% to 8.5%. Estimates appear high.
Following are consensus estimates for the S&P/TSX 60 companies for the third quarter of 2007 relative to the same quarter last year:
Company Quarter Third Quarter Consensus First Change
Earnings Reported Quarter 2007 EPS Since May 17
In 2007
Ace Aviation 3 $0.34 N/A
Agnico Eagle 3 0.28* 0.27* $(0.03)
Agrium 3 0.01* 0.49* 0.01
Alcan 3 1.21* 1.46* 0.02
BMO 4 1.35 1.41
ScotiaBank 4 0.89 1.03
Barrick Gold 3 0.46* 0.44*
BCE 3 0.48 0.53
Biovail 3 0.83* 0.43* (0.02)
Bombardier 3 N/A N/A
Brookfield 3 0.41* 0.23*
Cameco 3 0.11 0.52 0.03
Cdn. Imp.Bk. 4 1.98 2.04
Cdn.National 3 0.94 1.07 (0.02)
Cdn.Natural 3 0.87 1.16 (0.01)
Cdn.Oil Sands 3 0.62 0.59
Cdn Pacific** 3 1.03* 1.06*
Cdn. Tire A 3 1.15** 1.25
Celestica 3 0.18* 0.05*
Cognos 4 0.28* 0.34* 0.01
Cott 3 0.19* 0.17*
Enbridge 3 0.27 0.27
Encana 3 0.98* 1.16* 0.02
FNX Mining 2 0.24 0.38
Fording Coal 3 0.82 0.49
Goldcorp 3 0.22* 0.23* (0.02)
Husky Energy 3 1.61 1.71 (0.01)
Imperial Oil 3 0.72* 0.63*
Ipsco 3 4.15* 3.38* 0.15
Kinross 3 0.13* 0.10*
Loblaw 3 0.74 0.83 0.03
Lundin Min 3 N/A 0.55*
Magna A 3 1.36* 1.23* (0.07)
ManuLife 3 0.55* 0.64*
MDS 3 0.03* 0.18*
National Bk. 4 1.31 1.42
Nexen 3 0.36 0.78 0.06
Nortel 3 (0.20)* 0.25*
Nova Chem 3 1.00* 0.80* 0.01
Novelis 3 N/A N/A
Penn West 3 0.65* N/A
Petro-Can 3 1.36 1.31 0.01
Potash Corp. 3 0.46* 0.71*
Research in M 3 0.74* 1.12* 0.01
Rogers Com. 3 0.22 0.33 (0.06)
Royal Bank 4 0.96 1.08
Shaw Com. 3 0.25 0.27 (0.11)
Shoppers 3 0.57 0.66 0.01
Sun Life 3 0.93 1.00
Suncor 3 1.45 1.23 (0.05)
Talisman 3 0.39 0.33
Teck B 3 1.22 0.94
Telus 3 0.85** 0.92 (0.02)
Thomson 3 0.61* 0.44*
Tim Horton 3 0.27* 0.33* 0.01
TD Bank 4 1.20 1.42
TransAlta 3 0.18 0.27 (0.06)
TransCdaPipe 3 0.50 0.52
Weston 3 1.62 1.54 0.05
Yellow Pages 3 0.23 0.31
Yamana 3 0.01* 0.25* (0.03)
NA: Not available
*U.S. Dollars
** Median
Data sources: www.globeinvestor.com for Canadian Dollar estimates and www.zacks.com for U.S. Dollar estimates.
A qualification on the above data! Data provided by www.globeinvestor is slightly suspect. First Call, the source for Globeinvestor.com data appears to be changing how data is presented and distributed. In a few cases, data for the previous year changed without an identified reason (e.g. a stock split). Occasionally, earnings estimates no longer were available. Whenever Canadian data from Globeinvestor.com was omitted or looked suspicious, it was replaced by U.S. data from Zacks.com when available.
Tech Talk’s Weekly ETF Column
The column is entitled, “ETF 101: Investing in China with Exchange Traded Funds”. The question is, “When will the bubble burst?” The column will be released this afternoon at www.stockhouse.com
ETF News
Today, Claymore Investments is launching the Claymore Global Balanced Income ETF (TSX:CBD) and the Claymore Global Balanced Growth ETF (TSX:CBN) They are the first ETF Wrap portfolios in Canada (and the world) to provide a single ETF as a core part of an investor’s portfolio.
As a wrap, these global wrap ETFs are made up of about 13 ETFs and focus on balanced portfolios bringing investors the ability to buy one product and access multiple asset classes giving exposure to fixed income, equity, real estate, commodities and other sectors.
TSX:CBD and TSX:CBN are based on a Global Balanced Index by Sabrient Systems, a partner of Claymore Investments out of California, who focus on dynamic asset allocation models using equity and fixed income.
MER is reasonable at 0.70% (including the MERs for ETFs that are part of the wrap). More information is available at www.claymoreinvestments.ca
More on Gold Stocks
The sector is in the early bottoming and base building stage in preparation for a seasonal trade this summer. Traders seeking an entry point into the sector are watching for a series of good news events in the sector and positive responses to the news. Evidence of a possible series of good news events this year have appeared recently: IAMGold announced on Tuesday that implied resources at its Westwood project had increased 28% following recent development drilling. Moreover, the company is planning additional drilling this year and is hopeful that additional drilling will add to resources. The stock quickly responded on the upside and elicited several favourable comments by mining analysts. Many other producers or “close to” producers are drilling existing ore bodies with the intention of increasing additional resources based on higher gold prices. Favourable news flows could help the sector into the period of seasonal strength between July and September.
Chart courtesy of StockCharts.com www.stockcharts.com
CSTA News
The Canadian Society of Technical Analysts will be holding its annual meeting on Monday June 25th. Everyone is welcome. Come out and meet some of Canada’s top technical analysts and share your ideas with others interested in technical analysis. Speaker is Larry Berman, past President of CSTA and current Vice President of Market Technicians Association (i.e. The largest U.S. Technical Analysis Organization).
Location: Sheraton Center Hotel Toronto Hotel
123 Queen Street West, Toronto
Time: 12:00 Noon
Lunch is served
More information and registration: www.csta.org
See you there!
More on the Biotech Sector
Brooke Thackray’ book entitled, “Thackray’s 2007 Investor’s Calendar” includes an article entitled, “Biotech Summer Solstice: June 23rd to September 13th “. The trade is aptly named because out performance starting approximately on the day of the summer solstice – the longest day of the year. From 1992 to 2005, the trade was profitable on 12 out 14 periods for an average gain per period of 14.7% per period. The trade also was profitable in 2006, but with a diminished return of 4.6%.
Tech Talk’s studies confirm that a period of seasonal strength during the July to September period this year is pending. Technical data shows that the sector is trying to bottom, but a sufficient technical set up for an upward momentum move has yet to appear. Fundamental prospects are there: A series of good news events related to approval of drugs by the FDA is lining up. If responses to approvals are encouraging, requirements for the seasonal trade will be in place.
Tech Talk recently noted that the sector has a period of seasonal strength from July to December. Actually, the sector has two “sweet spots”: from July to September and in December. Brooke also discusses the late December “sweet spot” with the following comment in his book:
“It’s interesting to note that the biotech sector’s out performance picks up dramatically in mid-December. This has been attributed to the influential Morgan Stanley Pharmaceutical CEO’s Unplugged Conference that takes place at the beginning of January each year”.
Stay tuned. Tech Talk is watching for an opportune time to enter the trade based on technicals.
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