Pre-opening Comments for Thursday September 29th
U.S. equity index futures were lower this morning at 7:30 AM EDT. S&P 500 futures were down 30 points in pre-opening trade..
Next estimate of U.S. annualized second quarter real GDP is scheduled for release at 8:30 AM EDT is expected to remain unchanged at -0.6%.
Starbucks added $0.19 to $87.30 after the company increased its dividend by 8%.
![clip_image001[1]](https://timingthemarket.ca/techtalk/wp-content/uploads/2022/09/clip_image0011-16.png "clip_image001[1]")
Vail Resorts gained $8.36 to $218.65 after reporting a smaller than consensus fiscal fourth quarter loss. The company also offered positive guidance for fiscal 2023.
![clip_image002[1]](https://timingthemarket.ca/techtalk/wp-content/uploads/2022/09/clip_image0021-19.png "clip_image002[1]")
Smith & Wesson slipped $0.11 to $10.25 on news that the company is being sued over links to a mass shooting on July 4th
Rite Aid plunged $0.72 to $6.31 after reporting a higher than consensus second quarter loss.
![clip_image004[1]](https://timingthemarket.ca/techtalk/wp-content/uploads/2022/09/clip_image0041-7.png "clip_image004[1]")
EquityClock’s Daily Comment
Headline reads “Look to buy stocks and bonds when the yield on the 10-year Treasury note closes in on the Fed’s year-end target for Fed Fund Rate at 4.4%”.
http://www.equityclock.com/2022/09/27/stock-market-outlook-for-september-28-2022/
Next Tech Talk report
Tech Talk is taking a holiday tomorrow. Next report is released on Monday October 3rd.
Technical Notes for yesterday
Biogen $BIIB and Eli Lilly $LLY moved sharply higher on encouraging news on their Alzheimer’s drugs
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for September 28th 2022
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for September 28th 2022
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for September 28th 2021
Green: Increase from previous day
Red: Decrease from previous day
Links offered by valued providers
Links from Mark Bunting and www.uncommonsenseinvestor.com
Inflation Has Little Impact on Franco-Nevada – Uncommon Sense Investor
Why the Sun Will Also Rise for the Stock Market – Uncommon Sense Investor
Greg Schnell says “Financials wobble”
Financials Wobble | Greg Schnell, CMT | Market Buzz (09.28.22) – YouTube
Jane Galina says “Time to ride the silver stallion”.
Time To Ride The Silver Stallion | Jane Gallina | Your Daily Five (09.28.22) – YouTube
Mish Schneider notes “A double bottom in semiconductors and transportation stocks?”
Double Bottom for Semiconductors? | David Keller, CMT | The Final Bar (09.28) – YouTube
S&P 500 Momentum Barometers
First sign of an intermediate bottom has appeared! The intermediate term Barometer added 4.20 to 7.00 yesterday. It bounced nicely from a deeply over Oversold level.
The long term Barometer also offered evidence of a recovery from an Oversold level. It recovered 4.00 to 15.40 yesterday.
TSX Momentum Barometers
More signs of an intermediate bottom! The intermediate term Barometer jumped 13.56 to 21.61 yesterday. It remains Oversold, but shows start of a recovery from deeply Oversold levels.
The long term Barometer also recorded a significant gain, up 2.97 to 20.34. It remains Oversold. Trend has turned up.
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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September 29th, 2022 at 9:05 am
the AAII this week shows the bulls at 20.0% vs 17.7% last week and the bears at 60.8 from 60.9………
September 29th, 2022 at 10:17 am
Today and tomorrow, last 2 days of the month and the 3rd quarter, not unusual for down days, lots of stocks go X-Dividend, “window Dressing” for fund managers selling their losers, etc.
I am nibbling at some high quality stocks getting very cheap as per P/E, P/B, yield, etc. some now at 5 year lows.
September 29th, 2022 at 11:15 am
Thanks to Tech Talk, Ron, Canuck, Larry, Bruce, and all the opther great posters here. Great stuff. I read regularly though rarely post as am still humbled by the knowledge here. I’ve been mostly cash and large cap value (BMO, ENB etc) + a few oils since spring though have wateched my 2 techs (GOOG & ADBE) get drubbed. Currently watching for enties including TCN.to which is a well regarded Cdn Home Reit in the US market that is closing in on its Feb 2020 price which should/may act as support though not far beow that we are back to its 2015 high. Would appreciate your thoughts Canuck and Ron if you have time. Thanks, Paul
September 29th, 2022 at 2:25 pm
Paul
The stock chart is choppy and sloppy as far as charts go. Nice overall rising channel for 6 years. Since the breakout it has had a nice run up from 12 to 21 but the same pattern back down to 12 again. I wouldn’t want to see price break below the present price. Anything to do with real estate now is likely to be trashed due to rising rates and a typical reversal in real estate investments as far as I’m concerned. So I wouldn’t marry this or any other stock now. I’ve also posted a chart of seasonal trends.
https://stockcharts.com/h-sc/ui?s=TCN.TO&p=D&yr=8&mn=0&dy=0&id=p22018445970&a=1260201850
https://stockcharts.com/freecharts/seasonality.php?symbol=TCN.TO
https://stockcharts.com/h-sc/ui?s=TCN.TO&p=D&yr=8&mn=0&dy=0&id=p22018445970&a=1260201850
September 29th, 2022 at 10:03 pm
CMHC sees Canadian real estate prices falling up to 15%
https://www.bnnbloomberg.ca/cmhc-sees-canadian-real-estate-prices-falling-up-to-15-1.1825832
September 30th, 2022 at 8:10 pm
Good evening Canuck.
Saw your comments from wednesday wath is your take on thise bear charts i saw some head and shoulders.
September 30th, 2022 at 8:18 pm
Read this morning that ecinomists are thinking that rates could move up to 9%
This couls mean a lot of peeps would go and see their bank manager and drop the keys of there houses.
Collgue of mine was telling me she could afford up to 4k/mo mortgage. And salary is below mine her hubby makes about the same as my wife and i dont spend money here and thre and the left over is not that much when all expenses are paid and investments are made. These kids are in for a rude awakening.
September 30th, 2022 at 10:03 pm
Tony,
Well from Paul Volker in the late 70s, the recipe for stopping inflationary pressures is to raise rates well above the rate of inflation, and hold it there until we get a recession. If the FED and the BOC do not lose their nerve, we may just see 9% rates eventually, since inflation is around 8%. Maybe not this time around, it may take a recession, a short term recovery and another recession. We had back to back recessions before.
As I have said before, apparently from what I have read and asked agents recently, 60% of all mortgages in Canada are short term variables, and 20% of all mortgage types renew every year. As rates go higher and recession bites with higher unemployment, we will see a crash in Canadian real estate, particularly in bubble cites like Vancouver, Toronto and Victoria, the most expensive cities in Canada. I don’t think Alberta has to worry much, but these 3 cities are in extreme bubbles and will feel the pain the most. This is not new, we’ve seen this before.
Yep, many will give the keys back to the banks, but from anecdotal evidence, younger relatives of ours, they don’t borrow from banks any more, they go to mortgage brokers. These will not be as forgiving.
In the summer of 1981, my wife and I went to an open house in Richmond BC (Vancouver) to view a new house listed at $259,000. We had to line up for an hour with dozens of other people. The builder was offering a 5 year mortgage at 18%, a lot less than the bank at 22% or so.
In 1982, less than a year later, similar new homes were for sale at $140,000…and had no takers. Condo towers stood empty for years, and eventually tried to rent them out and still with incentives of 6 months free rent, trips to Hawaii, free TVs, etc. the could only fill them to 20%. Why? 10,000 people a month were leaving BC and going to Ontario looking for work… this went on for several years.
In 1983, house prices in Vancouver fell another 10%, same 10% in 1984, then stabilized in 1985 and 1986. In 1987, house prices doubled within 6 months and everybody had their house for sale trying to get out from under 18% mortgages.
I know a lot of people that lost their homes and were financially wrecked for decades over this. Some were builder friends who got wiped out.
Now add that to 40 year record high inflation, high food prices, high fuel prices, etc. 14 years of below normal near zero interest rates, and eventually, probably next year, record unemployment, we have a disaster waiting in the wings.
On the flip side, there will be great opportunities to buy real estate at record low prices…..if you are buying or selling in the same market, it makes no difference. As long as your property shows well, in great location, it will sell in bad markets, it just may take longer. If you have no mortgage but are willing to take one on at higher rates to own a better or larger piece of property….it will be an opportunity to move up. Been there done that.
September 30th, 2022 at 10:53 pm
Markets
All I can talk about is what I do. Other people do other things, each his/her own. More than one way to make a buck.
I have been 100% in cash since April, early May. Until now….
I have been “nibbling” here and there this week on price weakness in my margin accounts. We are around the June lows, give or take a few percentage points. Why? Because nobody knows what the market will do. We can look at history, charts, fundamentals, etc. and get an idea of where we are going, but nothing is for sure and anything can happen at any time to change the focus and direction.
There are stocks out there selling at 5 year lows, with great fundamentals paying good solid dividends. Great long term buys.
I have been through Bear markets many times before in over 40 years. What I do today is selectively buy high quality stocks, with good earnings, historically low P/E, low P/B, that pay solid dividends, at record low prices. I buy half positions, or less, with the expectation that the stock will go lower. When or if we get the wash-out, capitulation low, historically the 3rd week in October is a good candidate, I will double down on all of them, and buy new names as well. Then I will have zero cash.
The problem when we do get the capitulation low, is that everything is for sale, no place to hide, and like a kid with 100 bucks in his pocket in a candy store, we don’t know what is the best stock to buy, too many great buys all at the same time. So I pre-select my picks by buying smaller positions in my favourite names. I also keep a list next to my computer of the other stocks I want to buy. I cross them off as I buy small positions.
I am ready, now about 70% in cash. I hold cash ETFs in my 2 margin accounts (CMR and CASH).
In one account I buy stocks without selling the ETF and use it as collateral to buy new names. This is for safety reasons. If I run into trouble, I can sell parts or the whole cash ETF to reduce or remove the Margin instantly and avoid selling stocks. Then I can margin stocks again to double my positions. I also keep a dedicated line of credit nearby in case of emergency.
I make sure I buy dividend growth stocks, so if I am wrong, I get paid to wait. I buy best quality names, large caps, diversified, some financials as they lead the recovery, and some defensive like staples. Some high yield ETFs. No O&G in here as per demand destruction in a recession and no Utilities as they are Bond like and will suffer as rates go higher. I also make sure I only buy stocks take take 30% down for margin, so 70% loan. These are the best names to own as per the broker’s analysis, higher value, good volume, large cap, etc. They hold up better in a crash. The crappier the company the higher the down payment requirement on the loan, some so bad you cannot margin, and that’s a red flag, stay away. Too dangerous.
In my other margin account I buy the same names at the same time. But there I sell parts of the cash ETF so I have NO margin going forward or at anytime, unless I am between Xdividend dates and must hold for a few days only.
Margin must be diligently managed, daily, it is not for everybody. It can be very dangerous, like shorting. Need lots of experience and attention for this, with solid back-up plans.
In other words I slowly step in positions while waiting for better opportunities. I get the dividends, to goose up my monthly cash flow and cover the margin costs (deductible) while I wait.
Like a trader wrote in this vintage trading book I have from 1906; “think of a stock as a yard stick, I don’t care about buying at the bottom or selling at the top, all I want is a good 2 feet in the middle.” or Ron Meizel back in the old days on ROBTV: “the only people that buy at the bottom and sell at the top are the lucky and the liars”.
September 30th, 2022 at 10:55 pm
“Markets stop panicking when central banks start panicking,” Hartnett said, adding that he expects the S&P 500 to drop to 3,333, forcing a “policy panic” possibly around the G20 meeting in November. He predicts an equity rally after that, but says the US market won’t touch a “big low” until the first quarter of next year, when a recession and a credit shock will lead to a peak in yields, dollar and the Fed’s hawkishness.
BofA strategists said to “bite” into the S&P 500 at the 3,300 level — about a 9 per cent decline from the latest close, “nibble” at 3,600 and “gorge” at 3,000. Hartnett and his team added that a drop of 20 per cent below 200-day moving average has been a good entry point back into stocks in the past 100 years.
https://www.bnnbloomberg.ca/bofa-strategists-see-wall-street-rout-forcing-asset-sales-1.1826209
October 1st, 2022 at 12:06 pm
Re: #4; Thank you Ron !
October 1st, 2022 at 5:19 pm
S&P 500 Historical Annual Returns (1928-2022) Updated Monthly
https://finasko.com/sp-500-returns/
October 1st, 2022 at 6:58 pm
A comment by Victor Adair:
“The most important thing” for the financial markets the past few months, and especially for the last three weeks, has been the realization that the Fed is DETERMINED to get inflation down and “break the back” of future inflation expectations – even if that means causing a recession. Market sentiment is very negative and there is a high risk of a “credit event.”
October 1st, 2022 at 7:03 pm
Here is the Fear & Green Index. Always worth a look……………..
https://www.cnn.com/markets/fear-and-greed
October 1st, 2022 at 7:23 pm
Fear and Greed.
“Warren Buffett once said that it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.”
This statement is somewhat of a contrarian view on stock markets and relates directly to the price of an asset: when others are greedy, prices typically boil over, and one should be cautious lest they overpay for an asset that subsequently leads to anemic returns. When others are fearful, it may present a good value investment opportunity. ”
https://www.investopedia.com/articles/investing/012116/warren-buffett-be-fearful-when-others-are-greedy.asp
October 1st, 2022 at 7:30 pm
Stock Market Quotes “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
Who Was Sir John Templeton?
https://www.investopedia.com/terms/s/sirjohntempleton.asp