For GT Blog April 30th , 2009

Hello fellow bloggers and stock market participants.

Last March 12, 2009 with the TSX at 8011 we discussed “the recognition point”. This is a component of Elliott wave (3) or - a second up-leg advance which is usually the largest and most powerful wave in a trend. The market ignores bad news and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to "get in on a pullback" will likely miss the boat.

A buying panic can occur when the prices in wave (3) exceed the peak of wave (1) sometimes called wave three's midpoint, "the crowd" will often join the new bullish trend.

The chart below now displays the TSX Comp poised just below the recognition point

So where from here? A big run supported by sideline cash and short covering, or do we hit resistance and correct down to “re-test” those March lows?

Look at the technical evidence in favour of a burst above the recognition point.

The “safe” places such as sovereign debt, telecom, health care, utilities and consumer staples are weak relative to the “risky” places such as the financials, technology, energy and materials. Clearly the market has a renewed appetite for risk

Cash is Trash

For GT Blog April 29, 2009

Here at Getting Technical we always wish to get in on the “next big thing” early before others discover its greatness.

In the late 1990’s we used the low cost TIPS 35 index fund (Canada’s first ETF) as a low cost component of our index timing model. In November 2000, the Toronto Stock Exchange announced plans to phase out its popular TIPS 35 and TIPS 100 index participation units, and replace them with its new i60 units (XIU).

Now the ETF stampede is on with ETFs on everything – energy, technology, value, growth, water, food, bonds, infrastructure, gold and international indices. New mutual fund offerings are promoted by rock stars such as BNN’s Kevin O’Leary. If you don’t believe me do a Google on “kevin o'leary rockstar” and enjoy!

Keep in mind that you can lose money on ETF investing the same way you can lose on mutual funds and stocks. Simply buy high and sell low.

Now that ETF’s have risen from obscurity 10-years ago to be now the greatest investment product ever in the history of investing – we want more of them. Hell now we can buy short ETF’s, double short ETF’s and coming soon TRIPPLE short ETF’s. Who cares if they often don’t work – they are exciting!

Now we can buy “managed” ETF’s – yes folks managed mutual funds are for fools but a “managed” ETF is for us smarter new breed of investors.

Snap out of it!

The managed AlphaPro HAX vs. the unmanaged XIU – so far a loser

GT Blog April 24th 2009

I am sure followers of this blog also follow Don Vialoux’s daily TechTalk which is a brisk and refreshing daily commentary on the capital markets.

In his Wednesday morning publication Don quoted a recent study by Standard & Poor's entitled “Indices beat most managers.” Apparently over the last five years 70% of U.S. large-cap fund managers who use the S&P 500 as a benchmark for comparison have failed to match the performance of the index over that time.

Don's observation comes a day after BNN regular “black box” analyst Brian Acker glossed over the negative 1, 2, 3, 4 and 5-year returns of the Finley Select US Value 50 fund by insulting his TV audience on live television. The big irritant for Acker was a caller who pointed out the terrible 1-year return (at March 31, 2009) of a negative 53.88%, double the loss of the S&P500 benchmark or peer at a negative 24.10%.

When under pressure from BNN's Michael Hainsworth to explain the severe underperform and the negative losses from inception Acker effectively blew up in front of a live television audience stating technical analysis to be “useless” and then describing the traders “out there in TV land” to be “hamsters.” Another caller was ridiculed for suggesting a selling strategy.

Wow, I and others just got called "useless rodents" on national television!

I forgive Acker because he was afflicted by a street term known as "Ackers Folly."

Acker’s folly is the tendency of investors to sell winners quickly (because they are expensive) and to hold losers (because they are cheap).

This affliction can be cleared up with a few visits with a qualified technical analyst.

If Acker had used even the simplest stop loss strategy he could have saved his enterprise from this disaster - see the chart below - one of this fund's largest holdings with a simple 10-week low price channel -

Combat Ackers Folly - it can be cured

For GT Blog April 22, 2009

Last February 21, 2009 we at GT suggested a switch from Aurizon Gold (then $5 now $5) to Bank of Nova Scotia (then $24.83 now $33.87). We observed that the best returns occur when taking large positions in a rising stock sector and hold for several months. When this position is sold the proceeds are “rotated” into a new and different emerging stock sector.

This strategy depends on getting two or three trades right per year – you trade less and make more money. You then can spend more time on YouTube, hanging in sports bars, drinking beer, cleaning the barbeque and annoying your neighbours with loud music, leaf blowers and those power wash machines.

This is a trading market – cash is trash – if you wish to be a spectator look at some playoff hockey. The next big trade will be to get the timing right on the switch back from those hot banking stocks into those cold gold stocks - if I get this right (again) I will be a legend in my own mind – many advisors are good at this – hope your one of them


Coming soon – looking for a sell-bank & buy-gold signal

For GT Blog April 19, 2009

Hello fellow bloggers and stock market participants.

I usually think of natural gas when I eat too many peanuts or I have a beer with commodity traders. A few days ago I asked a commodity buddy for the symbol for natural gas

He paused and told me to try FART - on the NYMEX

Great (thanks George) - took me a few hours to get that one. In any event natural gas seems cheap and ripe for a trade - our gas / crude spread has the ratio at 10-year lows

If you don't deal with George look at the Horizons BetaPro NYMEX Natural Gas Bull+ ETF (HNU-T)


The Gas Crude spread - record cheapness

For GT Blog April 14, 2009

If I had a million dollars – I would promise to be a wise investor – I would never buy penny stocks, never write covered calls, never buy income trusts, never buy index linked anything, never believe anything on business television, never buy preferred shares, never buy IPO’s, never buy Canadian biotech stocks, never buy closed end funds and never buy “managed” exchange traded funds.

I would however buy some components of the lagging TSX Industrial Index

Two components, Onex Corp (OCX) and Viterra (VT) both display rising money flow numbers and the potential to break out into bull market territory

Disclosure – no direct or indirect ownership

For GT Blog April 9, 2009

Hello fellow bloggers and stock market participants.

We all know there is a current recession but the Canadian dollar is suggesting a fast recovery because of its recent strength vs the US dollar

If we buy into the fast global recovery scenario - Canada and the CDN$ will be a major beneficiary

The TSX should out perform most global equity markets

See relative performance chart below and note the recent CDN dollar outperform vs the US dollar


The CDN dollar vs the US dollar

For GT Blog April 5, 2009

Hello fellow bloggers and stock market participants.

Lets us have some fun with a skill test on how to spot early relative outperformance

FDX is stronger than UPS as measured from A to B, A to C or A to D

UPS is stronger than FDX as measured from A to B, A to C or A to D

Which stock will more likely forecast a turn in the US economy?

To learn the correct answer attend our Technical Analysis Level 2 seminar - to register go to: http://www.gettingtechnical.com/07_seminars/index.shtml


Two Transportation Bellwethers

For GT Blog April 2, 2009

Hello fellow bloggers and stock market participants.

A word on vacant advisors and portfolio managers

Are you fed up with advisors, money managers and portfolio managers whining about the terrible economy, the imminent collapse of the financial system the end of life as we know it?

Sit on cash they say, and because why?

Because they know nothing about the equity markets. You see we at Getting Technical know there is always a bull market somewhere – there is always an opportunity out there somewhere to park money. All it takes is some effort

The next time your advisor says “money market” run away.

The chart below was published by Getting Technical on December 20, 2008

BCE is now a "must own" stock – Bi-Weekly Update December 20, 2008 GT1287