Pre-opening Comments for Friday October 7th
U.S equity index futures were mixed this morning. S&P 500 futures were down 26 points in pre-opening trade.
Index futures moved lower following release of the September Employment Report at 8:30 AM EDT. September U.S. Non-farm Payrolls released at 8:30 AM was expected to slip to 250,000 from 315,000 in August. Actual was 263,000. September Unemployment Rate was expected to remain unchanged from August at 3.7%. Actual was a drop to 3.5% September Average Hourly Earnings were expected to increase 0.3% versus a gain of 0.3% in August. Actual was an increase of 0.3%.
The Canadian Dollar slipped 0.10 to US72.78 cents following release of Canada’s September Employment report at 8:30 AM EDT. September Employment was expected to increase 20,000 versus a drop of 39,700 in August. Actual was an increase of 21,100. September Unemployment Rate was expected to remain unchanged at 5.4%. Actual was a drop to 5.2%.
Advanced Micro Devices $AMD dropped $2.75 to $65.10 after the company lowered its third quarter revenue forecast by $1billion.
CVX Health $CVS plunged $4.09 to $94.49 after rating on Medicare plans administered by the company was lowered.
Levi Straus dropped $0.69 to $15.24 after the company lowered guidance for revenues and earnings.
EquityClock’s Daily Comment
Headline reads “If the change in Non-Farm Payrolls merely comes in around the September average of 0.4% (~600,000), the economy will have gained back all of the jobs that were lost during the pandemic”.
http://www.equityclock.com/2022/10/06/stock-market-outlook-for-october-7-2022/
Next Tech Talk report
Tech Talk will resume on Tuesday. Monday is an official holiday in Canada and a partial holiday in the U.S. In the U.S, the NYSE and NASDAQ are open, but the bond market and banks are closed. Volume on U.S. equity exchanges are expected to be greatly diminished.
Technical Notes for yesterday
Xcel Energy $XEL a NASDAQ 100 stock moved below $63.16 and $62.51 extending an intermediate downtrend.
DexCom $DXCM a NASDAQ 100 stock moved above $94.60 extending an intermediate uptrend.
Activision $ATVI, a NASDAQ 100 stock moved below $73.71 extending an intermediate downtrend.
Canadian food distributor and related stocks moved lower after a court ruling allowed food distributors to charge a fee for credit card transactions.
Loblaw Companies $L.TO a TSX 60 stock moved below $107.91 extending an intermediate downtrend.
George Weston $WN.TO a TSX 60 stock moved below $141.92 extending an intermediate downtrend.
Metro $MRU.TO a TSX 60 stock moved below intermediate support at $68.68/ extending an intermediate downtrend.
Marijuana stocks and related ETFs responded to a comment by President Biden who is considering a pardon for people previously convicted of possession. He also ordered a review of U.S. pot laws with consideration of legalizing possession
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for October 6th 2022
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for October 6th 2022
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for October 6th 2021
Green: Increase from previous day
Red: Decrease from previous day
Links offered by a valued provider
Michael Brush says “That’s investors’ cue to enter the stock market”.
S&P 500 Momentum Barometers
The intermediate term Barometer slipped 3.60 to 18.40 yesterday. It remains Oversold.
The long term Barometer eased 2.20 to 20.40 yesterday. It remains Oversold.
TSX Momentum Barometers
The intermediate term Barometer slipped 2.12 to 41.10 yesterday. It remains Neutral.
The long term Barometer was unchanged at 31.36 yesterday. It remains Oversold.
Disclaimer: Seasonality ratings and technical ratings offered in this report and at
www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed
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October 7th, 2022 at 10:21 am
Still nibbling…best quality names with solid dividends coming on sale….no margin all cash buys….
“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell”. ~ Sir John Templeton
October 7th, 2022 at 1:06 pm
Here is the Dow with the SPX and $COMP overlaid. One can see the sell off from the highs has been mild inspite of the bearish news. A pullback to the Fibonacci 38.2% retracement level shows that. Lots more to go on the downside for a meaningful correction. Same thing with the $TSX.
https://stockcharts.com/h-sc/ui?s=%24INDU&p=D&yr=3&mn=0&dy=0&id=p45440688992&a=673066566
https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=4&mn=0&dy=0&id=p36919636123&a=939923011
https://stockcharts.com/h-sc/ui?s=%24TSX&p=W&yr=20&mn=0&dy=0&id=p54354263849&a=1093149596
October 7th, 2022 at 2:52 pm
Energy – Overall no complaints there. XLE is coming up to resistance at 84.26 and is now stalling today. XEG stalled two cents away from clearing resistance at 16.14. Companies like LNG and DVN are close to their highs. IMO you just stay the course with this sector. It is largely detached from the overall market based on its’ own supply/demand fundamentals which are not as vulnerable to recessionary related demand drops. Global demand keeps rising. EIA forecasts a global demand increase of 2 million bpd in 2022 and another 2 million in 2023.
BCE – 20% drop from its’ peak. It must be a shock to a lot of investors who thought it was a safe low volatility stock.
60/40 Equity/Bond Portfolio Mix – Biggest yearly drop since 1931 – I got that stat from the Barometer weekly Zoom video update.
Ukraine – We may see Russia use a nuke at some point out of desperation and NATO will strike Russian forces inside Ukraine if this happens. Hopefully Putin acts rationally. It’s freaking dangerous.
October 7th, 2022 at 4:35 pm
Larry
I bought ZWB to-day at 17.74 which is yielding 7.44% which I consider fairly safe…..I don’t normally buy on a Friday but Monday we’re closed and if NY has a wash-out Monday it may reverse from a panic low in the morning and close up on the day…maybe I’m dreaming but that would mean
gap openings higher for the Tsx on Tuesday…in any event I’m happy with a monthly dividend in my TFSA of .11cents….
October 8th, 2022 at 8:22 am
Bruce – Not a bad entry point but there may be risk for a little more downside before financials bottom. If you are committed it will be higher a year from now. When financials are on a clear uptrend you would do better in ZEB as the covered call strategy will work as a drag in a rising market.
Canuck 2004 has been posting about buying while the market is low. At some point I would really like to purchase semis but I am inclined to wait a little more.
October 8th, 2022 at 11:01 am
Stink Bids – For anyone methodically putting cash to work who has a buy list it’s not a bad strategy to always keep some low limit order bids on your account to have a chance of filling at a bargain price if there is a high volatility day. You won’t be able to react quick enough most times to fill on an overdone drop.
October 8th, 2022 at 1:09 pm
larry
Yes both ZEB and ZWB have terrible looking charts with downward pointing m/a s but i’m content to just hold and collect the tax free monthly dividend in my TFSA a/c…
October 8th, 2022 at 8:01 pm
No one knows when or where the market will bottom. It’s a waste of time trying to guess. However, Bear markets do not last forever….
Right now the market sentiment is at extreme negativity, extreme bearishness, extreme fear… always an indication that one should be buying instead of selling. This is why Buffett famously said, to be “fearful when others are greedy, and greedy when others are fearful.”
For me, the best strategy is to slowly accumulate best quality names at the best price possible. Look for intrinsic value. No one can pick the bottom, so forget about it. Be content that you are buying great names with great yields at great prices.
Not everything is cheap, be aware….Covered call ETFs will give you great yield but will have limited upside…however there is a place for them in every portfolio, they crank out terrific monthly cash flows. I own them in very portfolio. They are defensive, so don’t own too many of them.
Two weeks ago, I was 100% in cash since April. Now about 25% cash….No margin, too early yet, we could still see a major capitulation low. I have been buying, no more that 2 names a day at most, half positions, in the best deals I can find. I own about 17 names now, good average dividend yield. That’s it for me now…Finished buying. I am at the maximum of my comfort level.
I will be looking for an extreme capitulation low to double up on them, if we get it this year. That will be a big sell-off on very high volume. Then I will return to buying. I suspect it will be next year, but who knows? As Ron Meizel used to say: only the lucky and the liars buy at the bottom and sell at the top.
I put in low ball limit orders at the price I like, and wait to be filled. Let the stocks come to you, do not chase up. Daily orders only, as the next day open could be 1,000 points lower, one never knows. Seen it before.
I buy blue chip names, with good volume, great balance sheets, strong dividends, at multi year lows, that have at least 25-30% potential upside. I do my homework, read analyst reports, do charts, look at the history of the name, etc. I make sure all names have a margin rate of 30%, which means you only need 30% cash down to own them, with 70% loan. These have been proofed by your broker as quality in name and volume.
Yep, it may take a year or two, who knows, but I can sit on it for a long time….since I am getting paid while I wait….and I love the cash flow. I am not a day trader or a swing trader, I am an investor, not the same thing.
In times like this better to step in slowly…and be very selective, be careful and be defensive…..but I’m ready for anything. Got cash on the sidelines, margin ready, line of credit next to it, so I can triple up if need be in 5 minutes.
In TFSA, I add regularly to various names, as dividends come in, around the 15th and the end of the month, like I always have. Dollar cost averaging….works like a charm over the long term. Fifty plus names equal weight. Business as usual.
Don’t know what to buy? Google Dividend Aristocrats or Dividend Kings, both US and Canadian names. Pick from the free lists you find…the work has already been done for you. No need to re-invent the wheel. Double check with analyst reports from your broker and run them through Morningstar.ca and look for the 10-15 year total return metric, if it is above 10%, it’s a good name.
October 8th, 2022 at 8:23 pm
By the way my RRSP is down around 18% this year, depending on the day, but my yearly dividend cash flow has not changed, steady as a rock. If anything it has gone up due to the weakness in the CAD, from my US dividend holding’s cash flows.
My dividends increase at a rate of over 8% a year, in my RRSP, every year. I have been retired for 11 years, so cannot add to my RRSP . Easy to calculate the rate increases. When was the last time you got a raise at work of 8% a year? Every year? Never. Beat inflation.
I ignore the capital loss as I am not selling, meaningless as it is not realised. I just focus on my strong monthly cash flow.
Some day it will all come back, even stronger. Makes me feel good, but again meaningless…..
October 10th, 2022 at 6:54 pm
Gotta love that U.S.$. I’ve got all my RRIF cash in U.S.$ and am surprised at the strength of it.
https://stockcharts.com/h-sc/ui?s=%24USD&p=W&yr=20&mn=6&dy=0&id=p26466036616&a=673066394
The broad market sold off once again today. She’s a sick puppy for sure…………