Despite late strength in North American equity indices yesterday, technical action by S&P 500 stocks remained bearish. Three S&P 500 stocks broke resistance and twelve stocks broke support.
S&P 500 stocks breaking resistance
Stock Symbol Previous New News
Trend Trend
Biogen BIIB Up Up
Nike NKE Up Up Better than expected earnings
Omnicom OMC Down Neutral
S&P 500 stocks breaking support
Stock Symbol Previous New
Trend Trend
Becton Dickenson BDX Neutral Down
Circuit City CC Down Down
King Pharma KG Up Down
Hess HES Up Neutral
Genworth GNW Up Down
Marriott MAR Down Down
Marsh & McLennan MMC Up Neutral
Norfolk Southern NSC Up Neutral
Nucor NUE Neutral Down
PNC Financial PNC Down Down
Safeway SWY Neutral Down
U.S. Steel X Up Neutral
Technical action by TSX stocks was quietly bearish. No TSX stocks broke resistance and two stocks broke support.
TSX stocks breaking support
Stock Symbol Previous New
Trend Trend
Celestica CLS Neutral Down
Onex OCX Up Down
Seasonality studies on the DAX and CAC Indices
Tech Talk recently received a request for a seasonality study on the Frankfurt DAX Index and the Paris CAC 40 Index. Results of the study were as follows:
DAX Index
Period of seasonal strength: End of September to the end of April
Number of profitable trades during the past 10 periods: 9
Average gain per period during the past 10 periods: 17.22%
Outside of period of seasonal strength: End of April to end of September
Number of profitable trades during the past 10 periods: 3
Average loss per period during the past 10 periods: 7.90%
Data does not include transaction fees or dividend income
DAX Index
Year End of Sept. Year End of April Percent Change Percent Change
Sept/April April/Sept
1997 3,438 20.9
1997 4,155 1998 5,107 22.9 (12.4)
1998 4,475 1999 5,393 20.5 (4.5)
1999 5,150 2000 7,415 44.0 (8.3)
2000 6,798 2001 6,265 (7.8) (31.2)
2001 4,308 2002 5,041 17.0 (45.1)
2002 2,769 2003 2,942 6.2 10.7
2003 3,257 2004 3,985 22.4 (2.3)
2004 3,893 2005 4,185 7.5 20.5
2005 5,044 2006 6,010 19.2 (0.1)
2006 6,004 2007 7,409 23.4
CAC 40 Index
Period of seasonal strength: End of September to end of April
Number of profitable trades during the past 10 periods: 9
Average gain per period during the past 10 periods: 14.68%
Outside of period of seasonal strength: End of April to end of September
Number of profitable trades during the past 10 periods: 5
Average loss per period during the past 10 periods: 6.09%
Data does not include transaction fees or dividend income
CAC Index
Year End of Sept. Year End of April Percent Change Percent Change
Sept/April April/Sept
1997 2,640 13.9
1997 3,008 1998 3,881 29.0 (17.6)
1998 3,198 1999 4,405 37.7 4.2
1999 4,591 2000 6,420 39.8 (2.4)
2000 6,267 2001 5,640 (10.0) (27.7)
2001 4,079 2002 4,463 9.4 (37.8)
2002 2,777 2003 2,954 6.4 7.8
2003 3,185 2004 3,674 15.4 (0.9)
2004 3,641 2005 3,912 7.4 17.6
2005 4,600 2006 5,188 12.8 1.2
2006 5,250 2007 5,960 13.5
THE CASTLEMOORE “CLASS” PORTFOLIO
What does CastleMoore think its typical Canadian investors should be invested in NOW?
Class Investor - Moderate Risk
|
Cash Equivalents:
|
|
7.5%
|
|
Canadian Equity Index:
Canadian Long-term bonds
|
|
32.5%
0.0%
|
|
Non-Canadian Indices:
|
|
60%
|
|
United States (hedged)
United States (unhedged)
US Treasury Bonds
Japan
France
Italy
|
35.0%
10.0%
0.0%
0.0%
7.5%
7.5%
|
|
|
TOTAL
|
|
100%
|
The dominant influence weighing on Canadian and US markets is the expectation of future interest rate movements. As long as this portfolio has been in existence, rates have trended higher. We have not owned any bonds for quite some time now, even for low risk investors – the risk was/is too high. With the US economy showing signs of slowing down, the uptrend may likely abate, and possibly reverse over the next several quarters. Then again (here’s the hedge) they may blow through the resistance they halted at this week. US core inflation numbers are out later this week which should fill in the US picture a bit more. In Canada, the inflation numbers appears to give Dodge no room – its up for now.
We need a trend to make money and one’s not easily discernible in bonds right now.
CastleMoore Inc. uses a proprietary Risk/Reward Matrix that places our clients within one of 12 discretionary portfolios based on risk tolerance, investment objectives, income, net worth and past investing experience. For more information on our discipline and methodology please see our website.
Submitted By 
's
