Tech Talk | Feb 20, 2014 05:42AM ET
Upcoming US Events for Today:
Upcoming International Events for Today:
Recap of Yesterday’s economic Events:
Event | Actual | Forecast | Previous |
JPY All Industry Activity Index (MoM) | -0.10% | 0.10% | 0.40% |
JPY Leading Index | 111.7 | 112.1 | |
JPY Coincident Index | 111.7 | 111.7 | |
GBP Claimant Count Rate | 3.60% | 3.60% | 3.70% |
GBP Jobless Claims Change | -27.6K | -20.0K | -27.7K |
EUR Euro-Zone Construction Output s.a. (MoM) | 0.90% | -0.20% | |
EUR Euro-Zone Construction Output w.d.a. (YoY) | -0.20% | -1.60% | |
CHF ZEW Survey (Expectations) | 28.7 | 36.4 | |
USD MBA Mortgage Applications | -4.10% | -2.00% | |
USD Producer Price Index (YoY) | 1.20% | 1.20% | 1.10% |
USD Producer Price Index Ex Food & Energy (YoY) | 1.30% | 1.40% | 1.20% |
CAD Wholesale Sales (MoM) | -1.40% | -0.40% | -0.20% |
USD Housing Starts | 880K | 950K | 1048K |
USD Housing Starts (MoM) | -16% | -4.90% | -4.80% |
USD Building Permits | 937K | 975K | 991K |
USD Building Permits (MoM) | -5.40% | -1.60% | -2.60% |
USD Producer Price Index (MoM) | 0.20% | 0.10% | 0.10% |
USD Producer Price Index Ex Food & Energy (MoM) | 0.20% | 0.10% | 0.00% |
JPY Merchandise Trade Balance Total (Yen) | -¥2790.0B | -¥2487.0B | -¥1304.2B |
JPY Merchandise Trade Exports (YoY) | 9.5 | 12.7 | 15.3 |
JPY Merchandise Trade Imports (YoY) | 25 | 22.7 | 24.7 |
The Markets
Stocks ended lower on Wednesday as investors digested the FOMC minutes from the latest meeting. The intention of the central bank is to continue to trim bond purchases in a predictable manner, barring any shocks to the economy this year. The Fed, however, refrained from mentioning the recent string of weaker than expected economic reports, housing starts being the latest, leading investors to doubt the commitment of the Fed to maintain appropriate levels of accommodation during adverse conditions. Economic data has been consistently missing expectations over recent weeks, leading to speculation that the “taper” will be “tapered” as the Fed will be forced to pause their plan of cutting back on bond purchases until the data stabilizes. Weather is still being used as the excuse for the recent weakness in economic reports. The trend of economic “misses” has pulled down on the Citigroup Economic Surprise Index, typically a headwind to equity prices in a non-QE environment.
For the most part, equity benchmarks around the globe remain just below resistance presented by the January highs. It remains apparent that a catalyst may be required to fuel a breakout. Without a breakout, some very clear topping patterns would be derived, either a double-top or head-and-shoulders, likely leading to the start of the widely discussed correction that continues to be debated. However, it still remains premature to speculate that a lower-high has been derived (but stay on your toes in case it does). Seasonal tendencies for equity markets around the globe remain positive through to April and May.
While broad equity benchmarks are hinting at potential topping patterns, one sector is suggesting a substantial bottoming pattern. With rates on the rise throughout 2013, REITs came under pressure, failing to participate in the broad market rally. The Dow Jones US Real Estate Index is now showing the appearance of an intermediate-term reverse head-and-shoulders bottoming pattern; a breakout above the neckline of the pattern, around 265, would target last May’s high around 295, or around 12% higher than present levels. Outperformance of the sector versus the market has been apparent since the year began. REITs have two periods of seasonal strength: the first occurs in the Spring from March through to May and the second occurs in the Summer from July through to September.
Seasonal charts of companies reporting earnings today:
Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.90.
S&P 500 Index
TSE Composite
Horizons Seasonal Rotation ETF (TSX:HAC)
Performance*
2014 Year-to-Date | Since Inception (Nov 19, 2009) | |
HAC.TO | -0.49% | 42.3% |
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