Top Stock Picks for the TSX and TSX Venture Archived Traders' Notes from July 1 2008 to October 31, 2008
| October
26, Weekend Update 11:45 AM EDT |
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The TSX 9,294 ( chart ) ended down 2.81% or the week. Volumes were above average with 1.4 billion shares traded. Last week we suggested the market was near a rally point. Monday kicked the week off with a surge of nearly 7%. The follow-through did not happen and the remainder of the week declined. Friday morning marked the lowest point of the year at 8633. Friday's close could have marked a turning point for October ? The sharp sell-off was met with buyers moving in and a strong close. West Texas dropped 11.6% for the week to close at $64.15 USD (chart ). The drop from $147 to $62 is a record decline of $85 in under 4 months. Technical support levels continue to fail; indicating world oil demand for 2009 is factoring in a major recession. At some point, a technical bounce will occur. The CRB commodity index 256, ( chart ) is down 9.26% for the week. Technical support near 292 failed and the next support is near 240. If 240 fails, 181 or the 1999, and 2001 lows could be re-visited. The speed of this sharp decline has not been witnessed for 30+ years. In the last 4 months, the CRB index has fallen 46% from a high of 474. The index is trading well below the 30 week moving average in a sharp sell-off. Similar declines to lesser extent have occurred in 1980-1982, 1985-1986, 1992, 1998-1999, 2002. Why the magnitude of the sharp sell-off ? Another charting location for the CRB index, bigcharts ( link ), use symbol us:crb, can graph back to 1957. The TSX is heavily weighted to commodities and does correlate to the CRB index. Last week we commented on the ETF XIU $14.09 (chart ). We see no change to a buy strategy for this ETF. If XIU dropped to below $13, wait for another bottom formation to form. |
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| October
18, Weekend Update 12:58 PM EDT - Emailed members update |
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The TSX
9,562 ( chart
) up 5.49% or the week. Volumes
were near average with 1.29 billion shares traded. The low of 8761 on
Wednesday
could mark a local double bottom for October. We could be in a position
for a
market rally. We define a rally as a short term 1-4 week move. At this
point in
the commodities game, the TSX is in a bear market trading below the 200
day
moving average. Traders with a time horizon of a few weeks could be the
winners
as any bear rally will most likely stall. Horizons Beta TSX 60 bear, HXD $31.64 (chart ) lost 10.7% for the week. Last week we suggested a stop-loss near $32. The TSX was closed on Monday as the US markets rallied. This brings up a key point to stop-loss limits. It is always a good idea to define a lower limit to a stop-loss. If you do not define the lower limit, the stop-loss will turn into a “sell at market” order. In this case, you would have exited the trade at near $21.28-21.50 Tuesday Oct 14 morning. If your stop-loss had a lower limit of $31.50, you would not have sold anything until later in the afternoon at a better price. This is one case example; you will need to keep some tabs on the market. The trade from our October 3 price pick of $27.37 could have resulted in an exit near $31.50 or 15%. Top ETF pick
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| October
12, Weekend Update 11:45 AM EDT |
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The TSX 9,065 ( chart ) dropped 16% or the week. Volumes were approximately 2X above average with 1.83 billion shares traded. The 1987 stock market crash is revisited with this history making week. West Texas dropped $15.89 for the week to close at 77.99 USD (chart ). Last week we suggested crude could have made a double bottom. Another look at the chart and the support levels of $90.42 and $85 are no longer valid. The $70.50 range may hold as a lower near term target. The $70 range was calculated looking at the double bottom of $90.42 and the last rally to $110.45. Subtract the two and you have approx. $20. Now subtract $20 from $90.42 and we could see the $70 range. This calculation is a "measured move" in technical analysis. Horizons Beta TSX 60 bear, HXD $35.43 (chart ) gained another 29.45% for the week. Last week we commented on the triple top break-out. The move higher did materialize on 23 million shares. A suggested stop-loss near $32 to lock in profits is needed. Horizons Beta Energy bear, HED $40.88 up from $24.46 (chart ) last week. This represents a 67% gain for the week. The spike up looks like some consolidation is near. The volumes are slowing down ( divergence ), as the sell-off is weakening. Oil and gas companies will rebound when the fear diminishes to greed. A new suggested stop-loss is near $35. Bottom Fishing
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| October
4, Weekend Update 9:50 AM EDT |
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The TSX 10,803 ( chart ) dropped 10.9% or the week. Volumes were above average. The commodities sell-off was fuel for the TSX to have one of the worst weeks in years. With no specific sector moving higher on the TSX, it was just down. Horizons Beta TSX 60 bear, HXD (chart ) gained 22.7% for the week. The move is a triple top break-out. We could see HXD move higher ? A stop-loss in needed in the trade. Horizons Beta Energy bear, HED $24.46 (chart ) gained 36.9% for the week. The move is a break-out. If Oil were to continue lower, HED should be added to the watch-list for further weakness in Oil and gas stocks. Upper resistance is in the $28-29 range. Again, use a stop-loss to enter the trade. West Texas $93.88 (chart ) could have made a local double bottom ? and a move higher could occur if the $90.42, 3 week low becomes support. If we do not hold the $90 support, the $85 level is the next level down. |
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| September
21, Weekend Update 1:32 PM EDT |
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The TSX 12,126 ( chart ) dropped 6% or the week. Volumes were above average confirming the market's downtrend. The TSX is heavily weighted to Oil and Gas, both lower on the week. Nexen $5.83 NXY ( chart ) moved down 8% for the week, as the oils were being sold off. Petro-Canada moved lower 3.7%, Suncor dropped $10.4%, and Encana down 6% for the week. Worth noting are the once strong uranium stocks, now near 3 year lows. A review of Denison mines gives you a quick look at the cycle of the bull and bear market. DML $3.56 ( chart ) , down 14.8% on the week. At this point we would wait for a clear bottom to be made before jumping in. A double bottom or head and shoulders bottom is needed. For the week ahead you should be watching to see what starts moving, if anything ? If the market rallies, the bank stocks could move higher. The Royal Bank jumped 7% the last time the bailout plan rolled out. RY, (chart ), $50.92 |
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| September
21, Weekend Update 2:30 PM EDT |
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The TSX 12,912 ( chart ) rallied 7% Friday on 579 million shares or 2X average trading volumes. For the week, up only 1%. Another rocky ride for traders and investors. A new low of 11788 was made during the week and the 7% rally was not that impressive looking at longer charts. The Canadian banks have made a 2 day rally following Wall Steet. The Royal bank and Great West Life $35.29 are leading stocks. Coal stocks made a big bounce on Friday. WTN up 40%, GCE up 23%. This stock group is still in a downtrend. The coal stocks have made some short rallies, but will these hold and are you prepared to jump in ? Oil stocks made sharp declines for the week and rallied Friday. A few names have closed above the 200 day moving average. We would stick to the big companies first if we were to see a follow-up on the 1 day rally. The Canadian Oil sands trust $44.95 closed on the 200 day moving average. COS is worth watching. Suncor, SU, $52 is another name to watch. SU could rally to $55 before upper resistance at the 200 day moving average. UTS ( chart ) $1.69 is a smaller player and the market has sold-off smaller names where confidence is weaker. UTS could rally if the big cap oil companies move up. West Texas crude $102.75 ( chart ) looks to have found support at $90. On the weekly chart, a rally to $113 is possible or the 40 week moving average. Natural Gas $7.84 ( chart ), continues to bottom out, finding support in the $7.50-8.50 range. Update on last Week's picks
Canadian Natural Resources CNQ, $87.31 ( chart ) is nearing a break-out. The 50 day moving average is broken and the volume signal could be in place. A close over $90-91 could signal a reversal and double bottom confirmed at $73.89 and 74.38. A stop-loss of $87 would then be placed. This pick assumes a return to oil stocks and may be a max. 10 day trade. |
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| September
15, BLACK Monday 10:30 PM EDT |
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The TSX 12,254 ( chart ) dropped 515 points. The TSX was crushed today. Selling was across most sectors. The banks held up the best, but losses piled up all day. The market continued down and closed at the lowest levels of the day. A few Horizon Beta ETF's to mention, Horizon Oil Bear HOD up 12.24%, HED up 10.75%, HXD up 8%, and Gold Bear HDG up 7%. These ETF's have been very volatile and have changed direction rapidly - not for the passive investor. Support at 11,750 could be what's next for the TSX ? After today's action, we would hold off on any bank stocks till we see how the fallout on Wall Street unfolds. By now, if you have been using stop-losses, you are out of the market. If you still hold positions, please do not double your positions as a stock falls. When you are in cash, your mind is clear and you can watch the market drop. |
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| September
13, 2008 Weekend Update 5:03 PM EDT |
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A roller
coaster ride for the week. The TSX 12,769 ( chart ) is
either putting in a bottom or continuing downward. It's too early to
make the call. We are in the bottom of the trading range. We can't find
any new stocks breaking out to 52 week highs and the best trading
patterns are reversal formations. When you buy into a reversal trend,
often it's short term. So unlike some of the picks like Kellogg's on
the us exchange, it's hard to find a new break-out on the TSX. A number of
groups are trading below the 200 day moving average. The gold, coal,
oil, drilling, uranium , and fertilizer sectors have closed
below the 200 day MA. It is worth noting the 200 day MA is a technical
measurement of a stocks future trading patterns. If the 200 day MA
itself is turning down, expect a bear market. The TSX ( chart
) 200 day MA is starting to turn down. The Canadian
bank stocks could be the next sector to move higher. We are watching
the Royal Bank.
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| September
9, 2008 Tuesday eve 10:00 PM EDT |
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The Market
plunge on the TSX 12,146 ( chart ) in
the last few days is suggesting we re-trace to the lows of the year,
and make a new low if the commodities do not rebound in the next 30
trading days. The coal stocks on the Canadian and US Markets
took the biggest hit of the day, down 15-20%. The Canadian banks were
the least hit in this minor crash. |
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| September
8, 2008 Monday Pre-Market 9:00 AM EDT |
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The Canadian financials could surge for the day, with the banks worldwide. The move higher would reverse our view of a market with no direction. 2 picks in the Rally:
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| September
4, 2008 Thursday Eve 11:35 PM EDT |
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The TSX 12,814 closed down 323 points or 2.46%. Volumes were above average. Technical support could be re-tested at 12,400 or lower to 12,000. The market is looking very weak and placing stop-loss positions under anything with profits is needed.The breakdown below 13,000 is a technical breakout downward. Horizon BetaPro HXD $21.00 up 4.74% today ( chart ) a possible breakout above the $20.58 resistance area. A suggested stop-loss is $20.50-$21. |
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| September
1, 2008 Long Weekend Update 11:45 AM EDT |
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The TSX 13,771 closed on the 200 day and 50 day moving averages last week. Volumes were very low, at 70% of normal trading. Another week of vacations for traders. Break-out Stocks, New Stock Scan Results :
Update on Break-out Stocks
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| August
23, 2008 Weekend Update 12:25 PM EDT |
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The TSX 13,447 closed up the week 2.86%. The commodities rally could continue if we were to see more weakness in the USD. With the volumes below average on the TSX for the week, a wait and see signal to the market's direction is needed. Traders are still on vacations. Update on last
Week's picks
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| August
19, 2008 Tuesday Eve 9:05 PM EDT, |
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| 10+ new stock picks and
stop-loss points emailed to our members.
Membership is free. We have re-posted this email for our non-members 24
hours later on Wednesday, August 20. We have observed a local (short term bottom) on the gold stocks in the past few days. Goldcorp could have made a local bottom at $31.11. If you want to play this use a stop-loss at $31. If support fails at $31, just move on and let the stop-loss run the course. A possible upside target is $38.
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| August
16, 2008 Weekend Update 11:05 AM EDT |
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The TSX 13,096 closed down 1.84% lower for the week. Thursday and Friday were low volume days and do not validate the move lower. On a weekly chart, the TSX 200 day moving average is trending sideways in a larger channel with 14,600 upper resistance and 12500-12700 lower support. Until we break-out of this band, a trader will need to play the short term trend of up and down. The correction for gas, $8.20 (chart) is nearing an end. Gas stocks are nearing a bottom. - see last weeks picks. We have moved out of our bearish holdings for shorting oil and gas stocks. Our trading notes are updated. HOD closed the trade up 10.7% and HED up 13.5%. Break-out Stocks, New Stock Scan Results :
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| August
10, 2008 Weekend Update 10:01 AM EDT |
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The Canadian dollar has moved sharply lower to 93.80 ( chart ). For now the currency could be technically oversold. A major component of the TSX are commodities. Oil, gas, gold, and raw materials have moved lower this past week. So why has the TSX not dropped further? Technology and financials have moved higher while the oil, gas, and gold sectors moved lower. Targeting the correct sector to trade is more profitable than the TSX index itself. Research in motion, RIM, (chart) $142.75 moved up 6% on Friday. The volumes were not above average, but the rotation of money out of the commodities is underway short term. RIM has a technical resistance level to overcome at $150.30. The volume will need to pick up if it were to surpass this area. Goldcorp, G, $33.10 ( chart ) was down 11.5% on the week. Gold has sold off for the last 3 weeks. A pause in this sell-off is needed before jumping back in. Goldcorp is now trading below the 200 day moving average which is a bearish signal. The correction for oil, $115.20 (chart) and gas, $8.33 (chart) which started early July will need more of a pause in this move down. The oil and gas stocks have followed the move lower. For now, gas and oil have moved down together. Encana, ECA, ( chart ), $70.95 will be our largest gas player to keep watching for a reversal. So far, this has not materialized. A close above $77-77.50 would be bullish. Canadian Natural Resources, CNQ, $77.58 ( chart ), If oil does rebound, CNQ is positioned on the 200 day moving average $79.54 for support. Several attempts to move lower have failed and a small base is forming. A stop-loss of $75 would prevent your downside risk. Trading updates from our trading notes:
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| August 5, 2008 Tuesday, Pre-Market Email to members | |
Possible Trades for the near term Horizon Beta
Short Oil, HOD, (chart ),
$8.55
(closed Monday), is the short for oil on the TSX. The bid/ask
pre-market is
$9.00. Suggested stop is $ 8.40. We suggested this trade July 23, 2008. |
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| August
4, 2008 Monday 11:00 PM EDT |
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Natural gas continues lower $8.73 (chart), down 7% today. From our weekend update, with the TSX closed for Monday, wait for Encana to move higher. From today's move ECA needs to trade sideways for a few days. Natural gas looks oversold, but we need to see a reversal move higher. The TSX could open lower Tuesday with the oil and gas stocks trading lower Monday. |
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| August
2, 2008 Weekend Update 1:30 PM EDT |
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The TSX (graph) moved sideways for the week to close at 13,496. Volumes were below average at 199 million shares. For the week down .71%. With the TSX below the 200 day moving average @13,809, we see a possible move higher and resistance at 13,809 or a move lower to 13,157. With the volume as a key indicator, the markets direction is uncertain. Sun Life Financial SLF, (chart ) $38.80 closes near a 3 year low. If we review the chart, we see a double bottom formed. For a trader, these are the types of bottoms to watch. More money will flow into a stock if we have a double bottom than a dead cat bounce rally. In a big down trend, the shorts will cover in the first rally. In the second rally off technical support at $38, ( providing this holds ) the price target could be the 200 day moving average of $43. A stop-loss at $37.85 is needed. Possible Reversals in down trends:
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| July
28, 2008 Monday 11:30 PM EDT |
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After moving higher until mid-day, the TSX 13,303 closed down .5%. The sell-off on Wall street could be sending shock waves across the border. The volumes were not high on the selling. The Canadian banks are nearing another leg down. The best case would be commodities turn higher short term, if not plan ( b). Plan (b) If the TSX were to move lower in a bigger sell-off, watch HXD, $19.77. The technicals are about to cross the 200 day moving average. From the weekend reversal suggestions, HSE, $43.53 Husky moved up 2.6%. Imperial Oil , IMO, moved as high as $51.84 before pulling back to $50.52. Please remember the stop-loss points in your trading. The market is weeding out the non-pros. |
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| July
26, 2008 Weekend Update 12:30 PM EDT |
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The TSX finished the week at 13378. Volumes indicate a possible move lower. Thursday was a big drop on above average volumes. Oil stocks could have slowed their trend down. Several integrated Oils are oversold and a short term rally ( 5-6 days ) is possible. Possible Reversals in down trends:
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| July
23, 2008 Wednesday 11:40 PM EDT |
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Keeping the TSX from a total sell-off are the financials. HED $16.47 Horizon Betapro Bear Oil and Gas. HED closed up 16.9% from our pick @ $14.09 July 15. A new suggested stop-loss is $15. A possible target range is $18-20 if the oils were to continue to sell-off. Royal Bank, RY $46.36 is up 8.3% from our last weeks pick at $42.80. A new suggested stop-loss is $45. We have stopped out of this but for the traders still in the trade, adjust your stop-loss. Break-out Stocks, New Stock Scan Results : Keeping the oil pullback theme going: Westjet, WJA, $15.69 has made a nice advance of 7.7% today. The move higher is a break in the down trend line. Volumes are 2X normal. A suggested stop-loss is $14.75 Horizons BetaPro Crude Oil Bear, HOD, $8.76 Volumes are higher and the move looks like a rounding bottom. 3.9 million shares traded up 6.4% today. If oil moves to the 121 support level, HOD will move higher. You could pay for a few tanks of gas if oil moves lower on this trade. A suggested stop-loss is $8.20. The fast trade: Air Canada AC, $5.34 up 21.3% today. Stop-loss is $4.71. This is high risk and high reward. This is a possible trade. |
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| July
19, 2008 Weekend Update 4:31 PM EDT |
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The TSX 13,515 remains bearish below the 50 and 200 day moving averages. Looking at a longer term chart of the TSX, 15,154 could be a long term top for the next 6 months. 13,845 could be upper resistance for any 2 week rally if we picked up momentum in the financials. Natural Gas, ( graph ) has broken a trend line higher. The move down in the last 10 trading days is bearish. Longer term, strong support exists for natural gas in the $9.5 -10 range. Update on Stock Picks
The Canadian traders' notebook is updated with new stop-loss positions. |
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| July
17, Thursday Pre-Market, Email Alert 8:55 AM ET |
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We have stopped out of the Financial Bear (Short) ETF, HFD, @ $31.50 mid-day Wednesday with a gain of 4% from our weekend pick. The Financials will lead the market higher, with a sector rotation out of Oil stocks for the near term.
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| July
16, Wednesday Pre-Market 8:45 AM ET |
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HED $14.09 Horizon Betapro - Bear Oil and Gas ETF should be watched for another move higher. If we break above $15, a move to $16+ is very possible. As indicated in the USA discussion on Oil, we could have just put in a local top on Oil at $147.90. Oil stocks are looking weaker. From our weekend stock picks we suggest increasing stop-losses for:
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| July
13, 2008 Weekend Update 11:40 AM EDT |
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The TSX 13,709 is below the 200 day moving average which itself is not a bullish signal. Not all sectors are moving lower. Suncor could be leading the oils higher, but several large integrated oils are moving lower. The sector as a whole could be shaken by the continued financial sell-off. CIBC, CM has put in another 3+ year low of $52.21. The Royal Bank, RY, $42.49 also has made a 52 week low. The Royal has just dropped past all technical support. At some point, we will be in a strong short term rally for these banks. The Canadian version of the US UltraShort Financials SKF is the Horizions BetaPro Financial Bear (Short) ETF, HFD $30.22 up 4.6% Friday. The volumes in the past 3 days for this ETF are 2X-3X average volume. We are nearing upper resistance of $32.40 and would suggest this be a near term target. Set a stop-loss at $28.70 if you are in this trade. A technical spotlight on Grande Cache Coal. GCE $7.73 First pull up the chart. Over the last few days, GCE has reversed a long downtrend from the highs of $10.78 to local bottom of $6.02. The 50 day moving average has become upper resistance at $8.04. Our current model is a short term target to $8.40 and then weakness. What we can't see is the overall market. If the TSX is in a rally or a downtrend, technicals on any one stock fall apart. The Horizon TSX Bear ETF, HXD, $18.72 is up from last week's $18.01 suggestion to play a falling TSX. A quick check of the HXD indicates we could be due for a reversal. Re-set a trailing stop-loss on the HXD to $18. Suncor, SU, $60.82 was indicated to open higher Friday. The 3.28% gain on Friday may not be a long trend upward, but a short term trade. Set a stop-loss at $59.48 if you are now in a long position. $63.92 is the 50 day moving average and could be a short term price target. Break-out Stocks, New Stock Scan Results :
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| July
8, Tuesday, at the Close 11:36 PM EDT |
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The TSX 13,809 has fallen below the 200 day moving average. The move down could be slowing, but 2-3 days are needed to reverse the sell-off. HED $14.38 Horizon Betapro - Bear Oil and Gas ETF The move was fast, up 12.3% from our weekend update. Increase your stop-loss to $13.80. We sold 50% of this move today at $15/share at 17% return. The 2 day break-out was fast, our members had 2 days pre-warning. |
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| July
5, 2008 Weekend Update 8:30 AM EDT |
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The TSX 14,010 is moving down faster than expected. The Technical support levels near 13796 has been tested. If we fail to maintain support at the 200 day moving average, a faster fall for the TSX would occur. The Horizon TSX Bear ETF, HXD, $18.01 is one way to play a falling market. A stop-loss of $17.45 is needed. Oil and Gas Stocks The current snapshot of the oil stocks is generally a wait a see down trend. We have seen some retracement of the big names. Petrocanada, PCA, $54.70 has been moving in a downtrend for the past 18 trading days. Some support at $52 is expected. Canadian Natural Resources, CNQ, $95.88 is near a trendline break to the downside. The stock has just closed below it's 50 day moving average of $97.92 or a warning signal. The topping formation on a daily chart is a triple top, $108.55, $109.32, and $108.12. It could be a head and shoulders top with a neckline at $95. Below $93 would be support at $85. Break-out Stocks, New Stock Scan Results : HED, $12.97, Horizon Energy Bear Plus. A base could have formed with a reversal signal confirmed if we trade above $13.25 to $13.50. This would assume the oil and gas stocks continue to move lower. A stop-loss at 11.50 is needed. |
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| July 2, Wednesday at the Close | |
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The TSX 14,034 is moving down faster than expected. Technical support levels are near 13800-13863 and look to be tested. If we fail to maintain support at the 200 day moving average, a faster fall for the TSX would occur. The Horizon TSX Bear ETF, HXD, $18.01 is one way to play a falling market. Suncor, SU, $56.35 dropped another 4% today. We have revised an entry point at $55 to a wait and see. The market does not make sense with Oil stocks selling off into a rising Oil price. West Texas Oil $142.10
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