Technical action by S&P 500 stocks was quietly mixed yesterday. Five S&P 500 stocks broke resistance and three stocks broke support.
S&P 500 stocks breaking resistance
Stock Symbol Previous New
Trend Trend
Chevron CVX Up Up
Danaher DHR Neutral Up
Fortune Brands FO Down Up
Valero VLO Up Up
Whirlpool WHR Up Up
S&P 500 stocks breaking support
Stock Symbol Previous New
Trend Trend
JC Penney JCP Down Down
Reynolds American RAI Up Neutral
Wendy’s WEN Up Down
Technical action by TSX stocks was mildly bullish. Four TSX stocks broke resistance and none broke support. Energy stocks were notable on the list of stocks breaking resistance thanks to continuing strength in the price of crude oil.
TSX stocks breaking resistance
Stock Symbol Previous New
Trend Trend
Axcan Pharma AXP Up Up
Gilden GIL Up Up
Husky HSE Up Up
Petrobank Energy PBG Up Up
Inter-day Comments for Monday June 18th
9:20 AM EDT: Mondays are building a reputation! Monday has been the day during the past few months when rumored or actual takeovers are announced. Today, it’s a rumor that BHP Billiton is thinking about a $40 billion U.S. takeover of Alcoa. Alcoa is higher in overnight trading. Strength in Alcoa, a Dow Industrial stock also has boosted Dow Industrial futures before the opening. The rumors also will impact Alcan at the opening. Alcoa recently made a hostile bid to acquire Alcan.
Alcoa has a positive technical profile. It tested its all time high on Friday and will break to an all time high at the opening.
Chart courtesy of StockCharts.com www.stockcharts.com
Update: The stock broke to an all time high in early trading.
‘Tis the season for earnings warnings! Historically, earnings warnings are released near the end of a quarter when a company realizes that it will not reach guidance. Molex gave negative guidance before the opening. The stock is trading lower in pre-opening trade.
Update: Wendy’s also announced negative guidance. Both Molex and Wendy’s came under technical pressure on higher than average volume.
Chart courtesy of StockCharts.com www.stockcharts.com
Gilead Sciences, a major U.S. biotech company announced after the close on Friday that it received FDA approval for a once-a-day treatment for pulmonary arterial hypertension. The stock has moved higher in overnight trading. The favourable response to Gilead’s news also could add interest to other biotech stocks. The biotech sector has a period of seasonal strength from July to December. It’s seasonal “sweet spot” is from the end of July to the end of October. More information on the biotech sector is available in today’s Financial Post.
Gilead has a positive technical profile. The stock will test its all time high at $84.45 at the opening.
Update: The stock opened higher, but failed to break to an all time high.
Chart courtesy of StockCharts.com www.stockcharts.com
Look for Canadian gold stocks to open higher. Gold is up about $3.00 U.S. per ounce in overnight trading. In addition, the Canadian Dollar is down about 0.30 cents U.S.. Canadian gold stocks have a period of seasonal strength from July to September. Early technical signs show that stocks in the sector currently are trying to form base building patterns.
Chart courtesy of StockCharts.com www.stockcharts.com
Tech Talk’s Weekly Financial Post Column
The column originally was published in the Financial Post yesterday. Access to the column is available through paid subscription at www.nationalpost.com .
Seeking a seasonal entry point into the U.S. Biotech sector
A period of seasonal strength for the Biotech sector is approaching. How is the seasonal trade looking this year?
Seasonal influences
The period of seasonal strength for the Biotech sector is from the end of July to the end of December. The AMEX Biotech Index advanced in nine of the past 10 periods. Average gain per period was 12.6%. Conversely, the Index advanced in only four of the past 10 periods from the end of December to the end of July. Average loss per period was 1.9%. Strength during the period of seasonal strength can be partially attributed to a series of biotech/health care conferences. Fall conferences are sponsored by the healthcare industry. The January conference is sponsored by the investment industry. Biotech stock prices advance prior to the conferences in anticipation of favourable news from clinical trials. The enclosed chart shows optimal entry and exit points during the past six periods.
Chart courtesy of StockCharts.com www.stockcharts.com
Technical influences
The AMEX Biotech Index has a positive technical profile. Intermediate trend is up. The Index remains above its 50 and 200 day moving averages. Resistance is at its all time high at 838.41. Support is at 708.53. Short term momentum data (Moving Average Divergence Convergence, Relative Strength Index, Stochastics) currently are neutral to slightly negative. Accumulation on weakness to its 200 day moving average at 758 is preferred.
Fundamental influences
Clinical trial results on a wide variety of important drugs are expected to be released later this year. Researched infirmaries include Alzheimer’s, coronary heart disease, anemia, rheumatoid arthritis and various cancers. Many of the trial results will focus on additional indications for drugs that previously have been approved by the FDA.
The Biotech sector frequently is the subject of takeover/consolidation rumors. Large pharmaceutical companies continue to look for biotech companies with new drugs that have reached Phase III and Phase IV levels of development.
The Bottom Line
Now is the time to place the biotech sector on your watch list. The sector is lining up for a possible seasonal trade this summer. Technical analysis will be useful for determining an entry point.
More information on the biotech sector:
Brooke Thackray’s book entitled, Thackray’s 2007 Investor’s Calendar notes that the biotech sector has a seasonal “sweet spot” from June 23rd to September 13th. Tech Talk analysis shows that the sector has two seasonal “sweet spots”. The first occurs during the July to September period and the second occurs in the November/December period. The former period is occurring this year when the sector is deeply oversold on the charts. Stay tuned.
Adrienne Toghraie’s “Trader’s Coach” Column
Networking
By Adrienne Toghraie, Trader’s Coach
www.TradingOnTarget.com
Many years ago I took a home study course called KOP’S Keys to Success (now out of print). I learned powerful tips about how to become successful for which I will always be grateful. My eighteen-year-old stepson at that time asked me for advice on how to become a multimillionaire. I told him to listen to KOP’S Keys twenty times. He diligently listened to the twenty-four tapes twenty times and before the age of thirty was worth almost twenty million dollars. (I should have taken my own advice.) While I have not reached his monetary level of success, I do enjoy a very successful lifestyle partially due to KOP’S Keys. One of the most important lessons from this tape series that raised me to my level of achievement was, “Know the 100 most important people in your business.” And yes, this is also true for any type of trader or investor - the most important being it helps you to be on a faster track to earning more profits in a shorter period of time.
The Importance Of Networking
There are many reasons to network, but I think the most important is that by bringing people into your life you become more resourceful yourself. There is only a certain amount of knowledge and energy you can get out of your time. When you add people to your life with their skills, knowledge, connections and other resources you multiply your ability for opportunity exponentially.
Some Areas Where You Can Find Or Establish Trader Networking
· Books, Magazines, Newspapers – Authors love when you compliment them
· Chat Rooms – Choose people that you can learn from and teach
· Webinars – An inexpensive and time saving way to get good information
· Conferences – Many speakers, investors brought together to make networking easier
· Trading Groups (AAII, CSTA) – Ongoing connections for exchange of information
· Schools, Mentors, Coaches – Faster track to success from years of knowledge
How To Network
· Truisms – open conversations with three truisms such as, What a bright and sunny day, I learned a great deal from that speaker, Discipline is the key to trading success
· Tell a Story – the quickest way to establish a relationship is to tell a story – I come to these conferences year after year and some of the things I learned are….
· Response – if the person responds with a story, you have established a relationship
· Find Common Ground to Connect – what have you found to be the biggest obstacles to trading success?
· Present a Card – tell the person you would like to connect and find out the best time
· Follow-up – do what you say you are going to do at the time you say you will do it
· Service – if there are opportunities, give service with no expectation such as send the name of the book you recommended to open the door to a relationship
You will find that networking with important people for your trading business is a key ingredient towards your success that will save you time, money, energy and besides it is a lot of fun.
Adrienne Toghraie, Trader’s Coach
919-851-8288
Disclosure: Mr. Vialoux does not own securities mentioned in this report.
June19,2007
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