Wednesday, October 31, 2007

Google trend trading

Google Inc (NASDAQ:GOOG) has been a legendary stock since the earliest days of its IPO. It has not disappointed even the most hyped expectations. GOOG added to its golden image with today's close above $700. The model performance of the stock makes for a wonderful chart.

For Stock Trends followers, though, the first cue for entry in this winner was a year ago when GOOG had its most recent Bullish Crossover. The stock suffered a slight summer cold in the previous period (it went Stock Trends Bearish in mid-July 2006), so the Bullish Crossover signal in October 20, 2006 was the first reversal of trend for GOOG. The stock was one of the Stock Trends NASDAQ Picks of the Week then (at $459). Although just about any entry point has been swell to date for this darling stock, the summer period in 2006 was challenging enough to advise an exit - however temporary it turned out to be. Here the Stock Trends indicators helped direct investors when price trend shifted positively. Trading with the trend is the Stock Trends modus operandi.

Stock Trends history- Google Inc (NASDAQ:GOOG)

Penn West Energizes

Big news on the Canadian oil patch today is the announcement that Penn West Energy Trust (TSX:PWT.UN) is entering a $3.6-billion dollar friendly takeover of Canetic Resources Trust (TSX:CNE.UN) - a combination that would create a considerable light oil producer in Western Canada. Both these trusts are already engaged in separate takeovers, including Canetics buyout of Titan Exploration Ltd. (TSX:TTN.A). Recent price action of PWT.UN and CNE.UN has brought both trusts into the Stock Trends screens for shifting trends: both stocks changed to Weak Bearish in last weeks report.

Stock Trends Report - Penn West Energy Trust (TSX:PWT.UN)

Stock Trends Report - Canetic Resources Trust (TSX:CNE.UN)

Friday, October 26, 2007

Bearish trend breadth

The current level of TSX Bull/Bear Ratio (0.4) was last plumbed in October 2002. We will recall that moment as the bottom of a 2-year bear market and the beginning of a tremendous 5-year bullish trend. But the current reading is more reminiscent of two other periods of time: the second quarter of 1998 and Q1 of 2000. In each of these periods there was a significant divergence in the signals of the Stock Trends TSX Bull/Bear Ratio and the S&P/TSX Composite Index. While the Bull/Bear Ratio then scraped below the 0.5 marker, the benchmark index was climbing to new highs. With the index presently doing a final chin-up to once again approach all-time highs, Stock Trends followers should now be wondering if the conflicting spirit of the Stock Trends sentiment indicator - a measure of market breadth - is advising extreme caution. Considering the subsequent downdraft of 1998 and 2000, prudence is advisable.

TSX Bull vs. Bears - Graph of Distribution of Stock Trends indicators:

Thursday, October 25, 2007

Gildan joins S&P/TSX 60 Index

Standard & Poors made the long-awaited changes to the S&P/TSX 60 Index yesterday, announcing that Alcan Inc. (TSX:AL), a victim of global consolidation, and two of the index's market-cap weaklings - Cott Corp. (TSX:BCB) and Celestica Inc. (TSX:CLS) - will be replaced. Incoming stocks are InMet Mining (TSX:IMN), Uranium One (TSX:UUU), and Gildan Activewear (TSX:GIL). GIL is a considerable trend improvement over BCB in the consumer category. It has been a Stock Trends Bullish stock since early October 2006. The stock today reached an early session 52-week high of $43.48 as index portfolio managers move to adjust their holdings. GIL was a Stock Trends Pick of the Week on October 5, 2006 at $27.53 (post-split), and would rank as one of the top 6 stocks in the Stock Trends S&P/TSX 60 Relative Strength Rankings with its current RSI of 114.

Stock Trends Report - Gildan Activewear (TSX:GIL):

Wednesday, October 24, 2007

Stock Trends has ear to the ground

The Stock Trends TSX Portfolio trading strategy is market driven. When the market moves toward a broad bullish trend the portfolio is active with new buys. Periods of activity reflect the general bullish sentiment. Tides are rising.

Stock Trends followers are well aware, though, that the mechanical trading system has been largely dormant since the first quarter of 2007. Although the TSX stretched toward new highs into the summer and rallied after the August correction, the trend landscape for the Stock Trends trading system has been unfavourable. Currently, only 30% of TSX stocks are Bullish. The market's volatility over the period since the ST Portfolio downshifted has generated profits for some trading systems, but the S&P/TSX Composite Index 6% advance since Q1 has not been without considerable risk. The cash position of the Stock Trends TSX Portfolio reflects the prudent steps of a trader with an ear to the ground.

Stock Trends TSX Portfolio trading history (1993-present):

Tuesday, October 23, 2007

Open Text opening

Tech stocks are generating deserved interest among investors. TSX investors have a limited range of options beyond the marquee name of Research in Motion (TSX:RIM). However, Open Text (TSX:OTC) is on the Stock Trends watch list. The stock will be a Bullish Crossover in the coming week after its staccato advance since mid-August. Trading volume in OTC has been weak or moderate over the past couple of weeks, but tech momentum could help swell the stock toward new highs. Look for another push in the coming week.

Stock Trends Report: Open Text (TSX:OTC):

Thursday, October 18, 2007

Black Monday Eve

Where were you on the eve of October 19, 1987 - Black Monday? Perhaps the date does not stir the same emotions as, say, September 11, 2001, but rest assured there is a solemn population of survivors of that cataclysmic day 20-years ago. The 23% drop in the Dow Jones Industrial Index that day ranks as the most dramatic move in the stock market in modern history. No other major market move comes close. It was an historic day that shook the foundations of our financial system and left many participants shell shocked.

I was no more than a market observer at the time, but the event left a mark on me. As the 20th anniversary of Black Monday hits us tomorrow we should all pause to consider the potential for another Black Swan - an outlier event of seemingly unimaginable possibility. Important to current investors to recall is the ominous feeling that hovered over investors on the weekend preceding October 19, 1987. The Dow Jones Industrial Index dropped 10% in the final days of the previous week and there was palpable concern heading into the weekend. The festering sore did indeed bust, and we should be wary of current day infections that have an equally dangerous potential to cripple the market.

For my part Black Monday Eve was tempered, indeed softened, by a weekend flight with my new born daughter as I introduced her to her grandparents for the first time. A reminder that life goes on - even in the midst of catastrophe.

Wednesday, October 17, 2007

Peerless Energy

Another recent Stock Trends TSX Pick of the Week,
Peerless Energy (TSX:PRY.A) is advancing in the
heightened oil & gas sector. The stock is now trading
at $4.30 and will be a Stock Trends Bullish Crossover
in the coming week.

Stock Trends Report - Peerless Energy (TSX:PRY.A)

Birchcliff energizes

A recent Stock Trends TSX Pick of the Week, Birchcliff
Energy (TSX:BIR) is surging above the $5.25 level.
With crude oil prices approaching an
inflation-adjusted all-time high, it's hard to avoid
energy exposure. Volume of trading in BIR surged on
Friday and remains high as the stock moves toward
resistance that hovers above. The stock hit a high of
$5.50 in early June before falling off to a late
summer low of $3.70. Look for BIR to show its bullish
potential over the coming days.

Stock Trends Report - Birchcliff Energy (TSX:BIR):

Tuesday, October 16, 2007


Technical analysis is all about putting current prices
into an historical context. Market technicians earn
their keep by comparing market conditions now with
conditions in the past, making the assumption that
patterns repeat themselves. But some things are
different. One notable difference is the market
participation - most specifically the number of
transactions that are executed. A decade ago the
average weekly number of transactions on the Toronto
Stock Exchange was about 200,000. Now the number of
weekly trades is 10 times that level. Last week there
were 2,572,170 trades on the TSX. The recent 5-year
bull run has much to thank in this heightened level of
trading. However, it remains to be seen how such an
active market will turn on itself if things go bad.

Monday, October 15, 2007

Petrobank on it

Among TSX-listed energy stocks Petrobank Energy and
Resources (TSX:PBG) has blazed its own profitable
trail for investors. It has outperformed the S&P/TSX
Composite Index by 48% over the past three months and
continues its assault on new highs. With crude oil
tipping $86 the sky may be the limit for PBG. The
stock was a Stock Trends Bullish Crossover at the end
of 2004, back when shares traded for $2.20. Today's
high of $45.18 shows us the sector, despite its
tempered performance as a group, can sprout some
high-flying picks.

Stock Trends Report - Petrobank Energy and Resources

Dow Theory 2007

Looking for cracks in the stock market's foundation is
a full time job. No surprise that market bears dust
off the Dow Theory to support their prevailing fear
that this Goldilocks market is not without some cold
porridge. A pillar of Dow Theory, however dated its
precepts, is that the Dow Transports should support
the Dow Industrials. What's good for the industrial
workhorses of America should be good for their
carriers. Globalization helps and hinders the theory,
but, in a theoretical sense this correlation has great

The current divergence of the two groups makes for
unsettling evidence of a precarious market moment as
we hurtle toward the October gauntlet. Stock Trends
followers would have noted the early divergence back
on August 3 when the Dow Transportation Index turned
Weak Bullish. The Transports turned Stock Trends
Bearish at the end of September, making the current
Stock Trends Bullish indicator of the Dow Industrial
Index a blaring contradiction with the Dow Transports'
Bearish indicator.

However, the same divergence occurred in the late
summer of 2006. The Dow Industrials pulled through
that period, later to scale 12,000 in fine fashion.
The Dow Transport Index has a ways to go to reverse
the Bearish trend and recover to its previous high.
The coming months will be telling.

Stock Trends Report - Dow Jones Transport Index:

Stock Trends Report - Dow Jones Industrial Index:

Friday, October 12, 2007

Husky's Bullish run ends

Since early 2003 Husky Energy Inc (TSX:HSE) has been
in a Stock Trends Bullish trend. That 246-week period
ended last week when the stock was tagged as a Bearish
Crossover - a signal that the 13-week moving average
trend line has dropped below the 40-week moving
average trend line. HSE is currently underperforming
the S&P/TSX Composite Index by 6% over the past
quarter, joining the sub-par performance of other
Canadian integrated oils.

Stock Trends Report - Husky Energy Inc. (TSX:HSE):

Thursday, October 11, 2007

A noble energy stock

Among the NYSE Stock Trends Bullish stocks Noble
Energy Inc.(NYSE:NBL) has delivered investors ample
return on its four-plus year trend. Last week's heavy
trading showed NBL may have more to give. Today the
stock sits above $75 and has advanced 25% since its
brief flirtation with the Stock Trends Weak Bullish
indicator at the end of August. A Weak Bullish
indicator alerts investors to a critical support area,
a signal to monitor for either selling on further
downside movement or accumulation on signs of price
support. NBL found support along the 40-week moving
average trend line (Stock Trends primary trend line)
and has rallied to today's new high. Energy bulls will
do well to stick with NBL.

Stock Trends Report - Noble Energy Inc. (NYSE:NBL):

Wednesday, October 10, 2007

Tim Bits, anyone?

Canadian Stock Trends followers probably felt deprived
when Tim Hortons (TSX:THI) went public last year.
Without a trading history, and absent the Stock Trends
indicators, THI did not fit our stock picking
criteria. Alas, its time has come. THI is now a Stock
Trends Pick of the Week selection. The stock has moved
above $36 and has potential to regain some lost
ground. Look for THI to hold above $36 with improved
trading volume.

Stock Trends Report - Tim Hortons (TSX:THI)

Canadian equities attractive

Although markets in Hong Kong, Southeast Asia, and
Brazil are performance leaders in the past quarter,
Canadian stocks have earned a handsome commodity
premium for investors. In U.S. dollar terms Canadian
equities advanced 7.6% in the last quarter. The
faltering U.S. dollar will continue to attract
international capital to Canadian equities.

A Ranking of Global Equity markets by Stock Trends
13-week Relative Strength Indicator:

Friday, October 05, 2007

TSX Group finds traction

A sign of the times for the commodity strength of the
Toronto Stock Exchange, TSX Group (TSX:X) has hit our
trend alerts. The stock outperformed the S&P/TSX
Composite Index by 14% in the third quarter and is now
trading above $48, a resistance level that dates from
the May sell-off. Bullish sentiment for materials and
energy stocks will help drive X higher.

Stock Trends Report - TSX Group (TSX:X)

Wednesday, October 03, 2007

ZCL Composites advances

After a couple of weeks of relatively light trading,
ZCL Composites (TSX:ZCL) jumped 10% to close at
$12.69. ZCL, a Stock Trends Weak Bearish stock, was
notable in last week's Stock Trends Top TSX Low Volume
Gains report. Today's trading volume was brisk, more
than the entire five trading days of last week. ZCL
has moved above resistance at $12 and is in a good
position to continue the breakout toward the $14 level.

Stock Trends Report - ZCL Composites (TSX:ZCL)

Johnson & Johnson healthy again?

Consumer staple and healthcare stocks will become
increasingly popular should the stock market stumble.
Johnson & Johnson (NYSE:JNJ) is a Stock Trends Weak
Bearish stock, an indication that the stock has an
improving bill of health. JNJ is now battling with
resistance at $66. Should it clear this level
investors may be rewarded with a nice move back to the
highs of a year ago ($69.41).

Stock Trends Report - Johnson & Johnson (NYSE:JNJ)

Tuesday, October 02, 2007

Dow Jones Industrial Index scales 14,000, but broad sentiment still bearish

The bulls are pumped about the Dow Jones Industrial
Index bursting through 14,000 yesterday. However,
although the absolute level of the index may be at new
all-time highs, the shallow depth of the broad market
sentiment gives investors plenty of reason to remain
sceptical of the future of this rally. Currently, the
Stock Trends Bull/Bear Ratio for the New York Stock
Exchange is 0.6, signalling that a vast majority of
stocks are trending in Stock Trends Bearish territory.
Over 50% of trending NYSE stocks are strong Bearish.
The aggregate distribution of the Stock Trends
indicators warns us of the fragile footing the current
rally rests on.

NYSE Stock Trends indicator Distribution: