Screening for strength in the face of adversity

The Globe and Mail, Number Cruncher

By Peter Ashton

Friday, March 30th 2018

In The Globe and Mail, Peter Ashton uses Strategy Builder to find Canadian stocks showing strength in the face of the recent market downturn. 

What are we looking for?

Canadian stocks showing strength in the face of the recent market downturn. Since the end of January, stock markets have been extremely volatile with the S&P/TSX Com-posite Index, S&P 500 and Dow Jones industrial average down between 5 per cent and 9 per cent. Some well-known stocks such as General Electric Co. and Facebook Inc. are each down more than 15 per cent in this period. However, some stocks have bucked the downward market trend and have managed to hold their own, and even rally amid the tumult.

 

The Screen

We will be using Strategy Builder to search for Canadian stocks that have demonstrated strength and low volatility in the face of the recent market turbulence. We begin by setting a minimum market-cap threshold of$3-billion. This will focus our search on mid- to large-cap Canadian stocks and avoid smaller companies with less stable streams of revenue. We will also limit our search to stocks currently trading within 8 per cent of their 52-week highs and with stock prices that are up overall in the past quarter.

Finally, to select stocks with lower-than-average volatility, we will filter using beta. We will select stocks with beta of between 0.75 and minus 0.75. Beta measures the price correlation of a security compared with the entire market. Stocks with beta in this range exhibit a smaller correlation to overall market moves.

 

What did we find?

Husky Energy Inc. tops our list with a $17-billion market cap and beta of 0.63. While many Canadian energy producers sold off in early February, Husky declined less than many of its peers and went on to rally strongly off its lows. The stock is now trading just 7.6 per cent off its 52-week high set in January and is up 1.4 per cent in the past quarter.

The least volatile stock on our list (having a beta closest to zero) is TMX Group Ltd. with a beta of minus 0.08. Unlike most of the Canadian market, TMX Group has put in a strong performance in 2018, up 5.6 per cent in the past quarter and now trading just 6.8 per cent off its January highs.

The best 13-week stock performance on our list belongs to specialty-foods manufacturer Premium Brands Holdings Corp., which produces and distributes food under a variety of brands. The company’s stock is up more than 10 per cent in the past 13 weeks and is up more than 40 per cent in the past year.

 

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.

 

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Asia Trading Summit

On March 22 and 23, 2018,  Trading Central exhibited at Finance Magnate's second annual Asia Trading Summit in Shanghai, China. At the event, the TC team was excited to introduce their new local Shanghai office and demo how our mobile solutions are enabling more of today's investors to take control of their portfolios.

To learn more about speakers, agenda, insights and more upcoming events, please visit the Asia Trading Summit event website: 

http://event.fx168.com/topics_2018ats_shouye_en.shtml

 

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An Event Driven Approach to Finding ETF Trade Ideas

Upcoming Webinar

Wednesday, April 11th, 2018 12:00pm Eastern Daylight Time (New York)

Hosted by Interactive Brokers, this educational webinar to learn the principles of modern technical analysis and how they may be applied to ETF trading. Although it has been applied to individual stocks for many years, investors and traders are now looking to technical analysis as a tool to find both short and long-term ETF trade ideas. However, with so many ETFs to choose from, finding well-qualified ideas is often a challenge. In this webinar, we will discuss our event-driven approach to technical analysis and explore a new ETF Newsletter available free to Interactive Brokers account holders, which simplifies the process of finding and investigating new ETF trade set-ups.

 

Meet your presenter:

Peter Ashton, 

VP, Retail and Self-Directed Investing 

Peter is a seasoned leader with 25 years’ experience conceiving and launching innovative software products and SaaS services. At TC, Peter heads the team responsible for client onboarding, training, marketing and all aspects of client satisfaction. He holds Bachelors’ and Masters’ degrees in Electrical Engineering and is a frequent speaker at key industry events such as the Traders Expo.

 

 

Register today at:

https://attendee.gotowebinar.com/register/3261583985439783425?source=recognia


FX Cuffs

On March 16th, Trading Central exhibited for the first time at FX Cuffs in Kraków, Poland. With over 5,000 attendees, FX Cuffs is the largest event for the investment industry in Middle Eastern Europe. Key themes of the event's presentations included how to leverage cryptocurrency to diversify your global portfolio, advanced concepts of Technical Analysis and blockchain technology. At the Trading Central booth, our team was excited to showcase our newest mobile solutions helping engage investors globally.

To learn more about speakers, agenda, insights and more upcoming events, please visit the FX Cuffs event website: 

https://expo.fxcuffs.pl/en/

 

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Seeking U.S. semiconductor stocks on the rise

The Globe and Mail, Number Cruncher

By Peter Ashton

Friday, March 16th 2018

In The Globe and Mail, Peter Ashton uses Strategy Builder to find U.S. semiconductor stocks showing strong price momentum. 

What are we looking for?

U.S. semiconductor stocks showing strong price momentum. Over the past month, momentum traders have piled into semiconductor stocks driving the Philadelphia Semiconductor Index higher by almost 12 per cent. The index recently surpassed its record high set back in 2000 during the tech bubble. Strong economic data as well an abundance of merger and acquisition activity in the industry has caused traders to bid up the prices of a variety of semiconductor names. Semiconductors are by far the best-performing industry in the U.S. market over the past month.

 

The Screen

We will be using Strategy Builder to search for U.S. semiconductor stocks that offer the prospect of strong earnings along with recent stock price momentum.

We begin by setting a minimum market cap threshold of US$10-billion. This will focus our search on large-cap U.S. semiconductor stocks, which typically have higher quality revenue streams than their smaller counterparts and also have a track record of performance. We will also limit our search to stocks with analyst forecasted earnings per share (EPS) growth rates this year of 12 per cent or more.

To ensure we focus on firms with the best price momentum over the past month, we will constrain our search to companies with a four-week price performance of 5 per cent or better and currently trading within 10 per cent of their 52-week high.

 

What did we find?

Topping our list is Micron Tech-nology Inc., one of the world’s largest providers of computer memory chips. Micron currently has the best four-week price performance on our list as well as the highest estimated EPS growth rate. Micron stock is up 37.6 per cent in the past month and up 42 per cent in the past quarter.

Broadcom Corp. has been in the news of late. In November 2017, Broadcom announced a hostile bid to acquire rival Qual-comm for about US$117-billion. Earlier this week, the deal was blocked by U.S. President Donald Trump citing national security concerns. In spite of this news, Broadcom is up 5.2 per cent on the month and up 16 per cent from its February lows.

Intel Corp. is the largest company on our list with a market capitalization in excess of US$240-billion. Intel stock is up more than 14 per cent in the past month and now trades less than 4 per cent off its 52-week high set on March 13. On Jan. 25, Intel announced fourth-quarter earnings, which beat analyst expectations for both the top and bottom line. Intel is the only semi-conductor stock in the Dow Jones Industrial Average.

 

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.

 

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How high can Shopify fly?

 Interactive Brokers, Traders' Insight

By Gary Christie

Friday, March 09, 2018

In Trader's Insight, Gary Christie uses Technical Insight to evaluate Shopify as an investment opportunity. 

 

Markets have seen some increased volatility. The technology sector has once again outperformed its peers having a one month performance of 5.4% compared to 3.4% in conglomerates and 1.6% in financial stocks. In times of increased volatility and market risk it is important to remain disciplined. We like to invest in stocks that have the highest probability of success. Our top down approach to stock selection has led our research inside the tech sector. Recognia’s technical event screener as identified a bullish setup on Shopify (SHOP).

A pennant formation has been confirmed (bullish): This tells me prices seem to be resuming a sharp rally after taking a brief pause. A bullish pennant pattern occurs during a dynamic market rally, representing a brief period of indecision before running off again in the same direction. The pattern consists of two converging trend lines with diminishing volume, and is confirmed when the price breaks through the upper boundary to resume the advance. The measured move of the pattern yields a price target in the range of $157 to $161 support found at the $130 level back in September.

The Commodity channel index (CCI) is turning up: This tells me the price is relatively far from its 20-bar average price. The CCI measures the deviation of the price from its average value (comparing to a chosen moving average, typically 20 bars). The oscillator is normalized by dividing by the typical deviation, so we get an oscillator fluctuating roughly between +100 and -100. Many traders use these as overbought (+100)/oversold (-100) markers and watch for signs of reversal, but original use was to consider long positions when CCI is above +100 (bullish event), and short when below -100 (bearish event). When the price crosses back in between +100 and -100, another event is triggered to indicate an end to the prior bullish or bearish situation and a possible opportunity to close out such a position.

 

Want to learn more about Technical Insight? 

 

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Screening for resilient US dividend stocks

The Globe and Mail, Number Cruncher

By Peter Ashton

Friday, January 22nd 2017

In The Globe and Mail, Peter Ashton uses Recognia Strategy Builder to find dividend stocks that may provide a cushion in the case of a market pullback. 

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Technical Insight Release 130

Meet the improved Technical Insight.

Here at Trading Central, we've been working hard to improve how investors interact with the rich information in Technical Insight.  Our latest update, release 130 brings:

  • Easily subscribe to custom filters within Technical Event Screener
  • See possible price movement from the Screener
  • See latest pricing details directly from the landing page!

Read more


A prescription for growth in a late-cycle bull market

The Globe and Mail, Number Cruncher

By Peter Ashton

Friday, March 2nd 2018

In The Globe and Mail, Peter Ashton uses Strategy Builder to find U.S. healthcare stocks poised to outperform. 

What are we looking for?

U.S. healthcare stocks that could outperform the broader market in the context of a late-cycle bull market.

With interest rates on the rise, many market watchers believe the bull market is heading into the last of the expansionary phases as the business cycle gets closer to a switch from expansion to contraction. Research by Fidelity's Asset Allocation Research Team has examined which sectors of the U.S. market perform best in the early, mid, late and recessionary phases of the business cycle. Over time, stocks in the energy, materials and health care sectors have tended to out-perform in the late-cycle phase.

 

The Screen

We will be using Strategy Builder to search for U.S. healthcare stocks that offer reasonable valuations, long-term earnings growth and short-term price momentum.

We begin by setting a minimum market cap threshold of US$5-billion. This will focus our search on medium to large-cap U.S. healthcare stocks that typically have higher quality revenue streams than their smaller counterparts and also have a track record of performance. We will also limit our search to reasonably valued stocks with trailing price-to-earnings (P/E) ratios of 20 or less.

To ensure we focus on firms with growing streams of earnings, we will screen for companies with five-year historical earnings-per-share growth rates of at least 5 per cent a year. Last, to select stocks with short-term price momentum, we will look for stocks trading up 5 per cent or more in the past 13 weeks.

 

What did we find?

Topping our list is Express Scripts Holding Co., a pharmacy benefit manager based in St. Louis, Mo. The company’s stock has risen 20 per cent in the past quarter and has a very low P/E ratio of just 9.7. Despite a series of missteps in 2017, the company announced fourth-quarter results in late February that beat analyst expectations for both revenue and earnings.

The best 13-week price performance on our list belongs to health care provider HCA Health-care Inc. HCA manages nearly 300 hospitals and free-standing surgery centres in the United States and Britain. The stock is up 23.8 per cent in the past 13 weeks and has advanced 13 per cent year-to-date.

Cardinal Health Inc. is a Fortune 500 company focusing on the distribution of pharmaceuticals and medical supplies. The company has a low P/E ratio of 12.1 and is trading up 17.1 per cent in the past 13 weeks. On Feb. 8, the company announced fourth-quarter results that beat analyst estimates for both revenue and earnings. The stock also has an attractive dividend yield of 2.6 per cent.

 

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.

 

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A search for stability, with an eye on institutional ownership

The Globe and Mail, Number Cruncher

By Peter Ashton

Friday, February 16th 2017

In The Globe and Mail, Peter Ashton uses Strategy Builder to find Canadian-listed stocks that offer low volatility. 

 

What are we looking for?

We will be using  Strategy Builder to search for Canadian-listed stocks that offer low volatility, high institutional ownership and strong dividend yields.

We begin by setting a minimum market-cap threshold of$5-billion. This will focus our search on medium- to large-cap Canadian stocks, which typically have higher-quality revenue streams than their smaller counterparts and also have a track record of performance.

We will also screen to include only stocks with institutional ownership levels of more than 50 per cent. Institutions such as pension-plan managers typically have longer-term investment horizons and are less likely to make portfolio changes (thereby moving the market for the stock) in the event of a market draw-down.

Dividend-paying stocks often provide refuge in the case of market turbulence because of their income-generating nature. We will constrain our list to stocks with dividend yields of 1.5 per cent or more.

Finally, to select stocks with lower-than-average volatility, we will filter using beta. We will select stocks with beta of between 0.5 and minus-0.5. Beta measures the price correlation of a security compared with the entire market. Stocks with beta in this range exhibit smaller correlation to over-all market moves than the average stock.

 

What did we find?

Topping our list is pipeline giant TransCanada Corp. TransCanada offers below-average volatility with a beta of just 0.31 and also provides a 4.3-percent dividend yield. On Thursday, the company announced fourth-quarter results that exceeded analyst expectations for both revenue and earnings. The company also announced its plans to go ahead with a $2.4-billion expansion of its NGTL pipeline in Western Canada.

The lowest volatility on our list belongs to Algonquin Power and Utilities Corp. with a beta very close to zero. Over the past month, Algonquin Power traded down by just over 4 per cent compared with over 6.4 per cent for the broader market. The company also has a very high level of institutional ownership at 75.3 per cent.

The largest company on our list is Canadian National Railway Co. with a market capitalization exceeding $70-billion. CN offers very low volatility (beta is 0.35), combined with excellent long-term price growth. The stock has gained almost 90 per cent over the past five years, all the while offering a dividend, which currently yields 1.9 per cent.

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.

 

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