2 sectors to take profits on

December 4, 20127 Comments

Of note: I am posting my sector coverage early this week due to a hectic schedule later in the week.

Back in June, I mentioned on this blog (https://www.valuetrend.ca/?p=1293) as well as on a BNN appearance that I liked gold, fertilizers and Candian banks. I particularly liked the banks and gold, and took positions in both of these plays via ETF’s. While I did sell my gold position back in October (only to re-buy when it fell back to $1700 in November) – I continue to hold my Canadian banks. I hold one individual bank and the BMO equal weight bank ETF (ZEB-T) for a total exposure of about 15% of my managed equity accounts.

Currently, as you can see on the top chart, the banks are brushing up against some fairly significant technical resistance at this time. While this weekly chart doesn’t show the fine details, a daily chart reveals that ZEB’s resistance comes in somewhere around $18.10 – $18.20. This technical resistance is coming in at the time that seasonal influences tend to peak for the Canadian banks. Research by Brooke Thackray shows a tendancy for the banks to outperform up until Q4 earnings season ends in December. I expect to reduce or possibly even eliminate my bank exposure very shortly based on these two observations.

 

The chart for natural gas below reveals the significant resistance levels that this commodity must break. Former support at $4 during 2010 & 2011 is now acting as resistance- this level has been tested very recently. The seasonal tendency, again noted by Mr. Thackray, is for natural gas to see its best performance come to an end in mid-December – similar to our banks. If gas breaks through $4, it could target $5 – something that I’d be a little hesitant to bet on at this juncture.

 

Keith on BNN MarketCall

I’m on MarketCall this Friday December 7th at 6pm to discuss the technical trends of the markets. Feel free to send emailed questions on your favorite stocks directly to BNN ([email protected]) ahead of the show, or CALL TOLL-FREE 1-855-326-6266 to have your stock questions answered live on the show.

 

7 Comments

  • Hi Keith:
    That was an excellent early call on the Canadian Banks. So how about Gold after breaking 1700 – Is there support at 1675/1680? and with the US $ entering (I think) a weak period. Hold or sell. Thanks.

    Reply
    • I remain long-gold. It has support at $1680 – a break will cause me to sell, otherwise, I am in with a target of around $1800

      Reply
  • Hi Keith,
    Thanks for update on banks. I am planning just like you based on Brooke Thackray & Don Vialoux & now your following ( seasonality)/technicals.
    BTW whats your analysis saying about GLD (Gold)??
    Will watch BNN show later.
    Have a nice time

    Reply
  • I wonder if in the near future you could revisit Apple. It seems to have broken your trendline from a few blogs back and is starting to look very bearish. This has obvious implications for the market overall as it is such a large weighting. I actually feel on a long term chart this is has been a parabolic chart of apple and that the move from jan 2012 to Sept 2012 was the blowoff parabolic spike. I think it can easily drop to 400 dollars from here and possible much more. Thanks.

    Reply
    • FUNNY YOU MENTION THIS DAVE–MY TARGET IS SIMILAR TO YOURS (MID-$400’S). I WILL COVER IT SOON
      BTW–CALL MARKETCALL SHOW TONIGHT AND ASK ABOUT APPLE–I’M ON AND WOULD BE HAPPY TO DISCUSS ON AIR

      Reply
  • Hi Keith,

    Do you have any idea why investors have been selling Dollarama recently? It has dropped 10% since its November high… I thought their recent earnings release was good and low value retailers should continue to do good in a slow economic environment. What is it that I don’t know? Thanks.

    Reply

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