Monthly Archives: January 2013

Canadian Dollar and TSX Composite Index Diverge

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Negative implications for the TSX Index
A one year line chart for the Canadian Dollar and the TSX Index showing the divergence starting In January, 2013. The correlation coefficient is plotted on the lower part of the chart.

Canadian Dollar and TSX Index 1-Year Line Chart courtesy of StockCharts.com

In the above line chart, I am plotting the one year daily performance of the S&P/TSX Composite Index with an overlay (blue line) of the one year performance of CurrencyShares Canadian Dollar Trust ETF (ticker:FXC).

The S&P/TSX Index is trading in an intermediate uptrend and is attempting to hold above the 12,800 support level. The Canadian dollar ETF is in a near-term downtrend with a break below the support level of $99.00 which was the November, 2012 reaction low. From a visual inspection of the above chart, it is evident that the two normally trade together as confirmed by the correlation coefficient at the bottom of the chart. The January, 2013 negative divergence is easily identified on the chart.

If the positive correlation between the TSX Index and the Canadian dollar is still relevant, then either the TSX trades down or the Canadian dollar trades up.  At this stage in the market, I do not forecast an uptrend for the dollar so one can conclude that the TSX Index will not advance much more is this intermediate uptrend. The Canadian dollar has lost some of its luster as a petro-currency and safe haven investment.

Referenced the last chart analysis for the S&P/TSX Composite Index.

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

iShares S&P/TSX Energy Index (XEG) chart analysis

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Near-term uptrend for XEG but the major trend is down
A six month candlestick chart for iShares S&P/TSX Capped Energy Index (ticker:XEG) showing the near-term uptrend and resistance levels. RSI is confirming the neart-term uptrend but the intermediate trend is sideways and the major trend is down.

iShares S&P/TSX Capped Energy Index (XEG) 6-Month Chart

With a weighting of 27.88% in the S&P/TSX Composite Index, the energy sector holds the key (along with materials—16.88%) for the continuation of the uptrend in the index. But with the underlying commodities, including oil and natural gas, not breaking out to the upside; it is hard to be optimistic. And then there is the frustrating Canadian crude oil differential due in part to pipeline constraints. The differential compared to world oil prices (Brent) is around $50.00 per barrel. Canada imports around 40% of the oil it consumes. So eastern Canada is paying world prices for crude and western Canada is losing $1.5-billion a month because of the differential. The oil visionaries out west, with the “let eastern Canada freeze in the dark mentality”, were not the great oracles. Who needed to ship oil to the east when our friends to the south would take all we could produce out west? You have the answer today and there is no easy solution. Pipelines cannot be built in a day and the U.S. is able to squeeze more and more out of their wells due to advances in drilling technology—hydraulic fracturing.

The financials, with a weighting of 29.62%, have done the heavy lifting and are up over 19% from the November, 2012 low. But the financial sector is close to major resistance levels and is due for a consolidation or correction.

XEG – S&P/TSX Capped Energy Index Fund – Suncor represents 18.60% of this fund.

Reference the last chart analysis for the S&P/TSX Index posted on January 18, 2013

Reference the last chart analysis for XEG posted on September 18, 2012

Relevant articles picked from the Web:

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippet is from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

Intermediate uptrend continues for S&P 500 Index

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New support level of 1,470 for S&P 500
Chart analysis for the S&P 500 Index showing the intermediate uptrend and the new support level of 1,470. RSI and volume are the confirming the uptrend.

S&P 500 6-Month Daily Candlestick Chart

The trend, rsi and volume indicate the index has a chance at the all-time high of 1,565.15 reached on October 9, 2007. But the first test will be 1,500 which is a significant round number. On the reverse side, a break below support of 1,470 would be a strong indicator to liquidate long positions.

Reference the last chart analysis for S&P 500 posted January 4, 2013

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

TSX Composite Index chart analysis

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TSX Index intermediate uptrend and resistance levels
Chart analysis for the TSX Composite Index showing the intermediate uptrend with resistance levels. RSI and volume are confirming the uptrend.

TSX Composite Index Weekly Chart

The 12,800 level near the February, 2012 intraday high of 12,788 has been a significant support and resistance level back to June, 2011 when it acted as support. Then it was a resistance level in September, 2011. The reversals of roles in an important concept in technical analysis. I  want to see a confirmed close around 12,900 that holds for two days before the 12,800 price zone is declared a new support level.

The TSX Composite Index has the momentum to breakout above near-term resistance of 12,788 which was the February, 2012 intraday high. But; the materials and oil sectors, which have a 45% weighting in the index, are not participating in the advance. These two sector will have to move upward to sustain the intermediate uptrend in the TSX Index to the 13,500 resistance level. And for these two sectors to move, the underlying commodities have to move upward. But, there is no intermediate uptrend for gold, silver, copper, or oil. And, then there is the frustrating Canadian crude differential partly due to pipeline constraints. And, then there is the low North American price for natural gas.

Reference the last chart analysis for the TSX Index posted on January 10, 2013.

Relevant articles picked from the Web:

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

Precision Drilling (PD:TSX) chart analysis

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Near-term uptrend and major resistance at $9.00
Near-term uptrend for Precision Drilling with major resistance at $9.00.

Precision Drilling 1-Year Bar Chart

Precision Drilling near-term uptrend will meet resistance at $9.00. Unless there is a confirmed break above this level, there is no reason to hold this stock.

The Canadian energy sector which represents 27.88% of the S&P/TSX Composite Index is not participating in the intermediate uptrend in global equities. It is a major reason (along with materials) why the TSX Index is not moving up relative to global equities. The Canadian crude oil discount, caused in part by pipeline constraints, has added to the pain in the energy sector.

Reference the last chart analysis for Precision Drilling posted on July 26, 2012.

Visit the Precision Drilling website for a profile of the company and the latest financial numbers.

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

Russell 2000 ETF (IWM) long-term chart analysis

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Russell 2000 long-term uptrend and all-time high
Long-term chart analysis for the Russell 2000 Index on the logarithmic chart. The index and the associated iShares ETF (ticker:IWM) are trading at an all-time high.

Russell 2000 iShares ETF (IWM) Logarithmic Chart

The Russell 2000 Small Cap Index and the ETF proxy iShares Russell 2000 ETF (ticker:IWM) are trading at an all-time high with a long-term uptrend. The fact that smaller capitalization stocks are leading the markets higher is a good sign for the continuation of the uptrend in the overall U.S. stock market. It is now trading around 16% above the November, 2012 low. The 15% to 20% intermediate gain for a stock or index is the critical range to monitor for topping patterns.

The large capitalization stocks represented by the S&P 500 Index and the SPDR® S&P 500® ETF (ticker:SPY) must now follow and breakout to new all-time highs. It is worth noting that the performance of both the Index and ETF have been skewed because of the relatively large weighting of Apple — 3.62% and 3.57%.

An educational link to review is Largest ETFs: Top 100 ETFs By Assets.

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Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

U.S. dollar versus yen chart analysis

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U.S. dollar is surging versus the yen
Intermediate and near-term uptrend for the U.S. dollar versus the yen as the Bank of Japan adds to the asset buying program. This is the Japanese version of Operation Twist.

U.S. Dollar versus Yen 3-Year Chart

Bank of Japan has eased the inflation target from 1% to 2% after government demands and most likely will add to the asset buying program. This is the Japanese version of Operation Twist to reinflate the stagnant economy. The net result is a lower yen versus the U.S. dollar and other major currencies. This should help the major exporters like Sony and the Japanese automobile industry.

Are we entering a new period of currency “wars”? Both the ECB and the Federal Reserve have implemented variations of quantitative easing to reinflate stagnant economies. Exporting nations cannot tolerate a rising currency as they try to revive stagnant economies. For example, the euro is already in an intermediate uptrend versus other major currencies and this will not be welcomed by a major exporter like Germany. Relative to other euro zone countries, the German export oriented economy prospered in part due to the weak euro.

Relevant articles picked from the Web:

______________________________

Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca

Intel (INTC) chart analysis

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Intermediate and near-term uptrend for Intel
Chart analysis for Intel showing the intermediate and near-term uptrend with the resistance zone.

Intel 6-Month Candlestick Chart

The major trend is down for Intel (ticker:INTC) but the intermediate and near-term trends are up. The company reports after the bell on Thursday and this could be the catalyst to break above the resistance zone. But January options expire on Friday and there is always a tendency for a stock to be pinned to the nearest option price which is $22.50.

Reference the website for Intel to review the fundamental data and latest earnings report.

Relevant articles picked from the Web:

______________________________

Note: Click on HOME for updated postings. This technical analysis is for educational purposes so you can learn to trade online using candlestick charts and other technical indicators including volume, moving averages and oscillators. Please conduct your own chart analysis or consult your financial advisor before making investment decisions. The chart snippets are from BigCharts.com which I recommend and have used for fifteen years. The author of this article may hold long or short positions in the featured stock or index.

© 2013 TradeOnline.ca