Tech Talk for Monday April 23rd 2018
U.S. equity index futures were higher this morning. S&P 500 futures were up 6 points in pre-opening trade.
First quarter reports continue to pour in. Companies that reported this morning included Alaska Airlines, Kimberly Clark, Halliburton and Hasbro.
Kimberly Clark added $0.72 to $100.75 after reporting higher than consensus first quarter earnings. The company also raised its guidance.
Hasbro dropped $3.81 to 79.00 after reporting lower than consensus first quarter sales and earnings.
Sears Holding gained $0.49 to $3.50 after ESL Investors indicated its interest in buying Sear's Kenmore line.
Lululemon dropped $2.01 to $94.30 after Needham downgraded the stock to Neutral from Buy.
Merck gained $1.35 to $60.18 after Goldman Sachs upgraded the stock to Buy from Neutral.
EquityClock's Daily Market Comment
Following is a link:
http://www.equityclock.com/2018/04/20/stock-market-outlook-for-april-23-2018/
Note seasonality reports on Apple, PHLX Semiconductor Index, Margin Debt, Canada CPI and Canada Retail Trade.
WALL STREET RAW RADIO – SATURDAY – APRIL 21, 2018
WITH HOST, MARK LEIBOVIT. GUESTS INCLUDE: DON VIALOUX, HENRY
WEINGARTEN, HARRY BOXER, RAY MERRIMAN AND SPECIAL GUEST, MARK SKOUSEN
The Bottom Line
Technical action by North American equity markets remained positive last week April historically has been the second strongest month in the year, second only to December.
This is the time of year when favourable seasonal influences are triggered by encouraging corporate news released with first quarter reports at annual meetings. Chief executive officers love to give good news to shareholders at annual meetings. Results to date have been positive: 80% of reporting S&P 500 companies have beat consensus earnings estimates and 72% have beat consensus revenue estimates. Responses to first quarter earnings reports released during the past four weeks (except reports by major banks) have been positive. Look for more of the same this week. First quarter earnings by S&P 500 companies are expected to increase 18.3%. Look for news on dividend increases and share buybacks.
The energy sector continues to show encouraging seasonal strength. Seasonal strength for the sector is from mid-March to mid-June. Preferred strategy is to own energy stocks and related ETFs on both sides of the border.
A word of caution on the trend for U.S. Interest rates! Yield on 10 year Treasuries popped on Friday to a four year high extending an intermediate uptrend. Next FOMC meeting to consider another increase in the Fed Fund Rate is scheduled next week with results to be released on Wednesday May 2nd. Anticipation of another increase in the Fed Fund rate likely will limit upside potential in equity markets early this week.
Prospects beyond the end of April become increasingly murky. Negative political influences on North American equity markets during a U.S. mid-term election year are strongest between May and October. This year, investors will focus on the possibility of a change in control in the House of Representatives and Senate. The Republicans currently have a slim majority in both legislative bodies.
Economic News This Week
March Existing Home Sales to be released at 10:00 AM EDT on Monday are expecting to increase to 5.55 million units from 5.54 million units in February
March New Home Sales to be released at 10:000 AM EDT on Tuesday are expected to increase to 630,000 from 618,000 in February.
April Consumer Confidence Index to be released at 10:00 AM EDT on Tuesday is expected to slip to 127.0 from 127.7 in March.
March Durable Goods Orders to be released at 8:30 AM EDT on Thursday are expected to increase 1.2% versus a gain of 3.0% in February. Excluding transportation orders, March Durable Goods Orders are expected to gain 0.4% versus an increase of 1.2% in February.
Weekly Jobless Claims to be released at 10:00 AM EDT on Thursday are expected to slip to 230,000 from 232,000 last week.
First Estimate of First Quarter U.S. Real GDP to be released at 8:30 AM EDT on Friday is 2.0% versus a gain of 2.9% in the fourth quarter.
March Chicago PMI to be released at 8:30 AM EDT on Friday is expected to increase to 57.9 from 57.4 in February.
April Consumer Sentiment to be released at 10:00 AM EDT on Friday is expected to increase to 98.0 from 97.8 in March.
Earnings News This Week
Observations
Technical action by individual S&P 500 stocks was quietly bullish last week. Number of stocks breaking resistance totaled 54 while number of stocks breaking support totaled 34. Notably, consumer staples stocks were on the list of breakdowns and energy stocks were on the list of breakouts. The Up/Down ratio increased last week (204/243=) 0.84 from 0.78.
U.S. economic news this week will focus on first quarter real GDP to be released on Friday
Canadian economic news is virtually non-existent this week. Focus is the likelihood of a national strike by workers at Canadian Pacific, a potentially damaging short term event to Canada's economy.
Medium term technical indicators in the U.S. (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) remained in upward trends last week despite weakness on Friday.
Medium term technical indicators in Canada also moved higher last week.
Short term technical indicators for U.S. and Canadian equity markets, commodities and most sectors (20 day moving averages, short term momentum) moved higher last week. However, many are overbought and showing early signs of peaking.
Seasonal influences remained normal last week. Seasonal influences on a wide variety of U.S. and Canadian equity indices and economic sensitive sectors tend to show strength starting near the beginning of March and continuing to early May. See charts below:
The outlook for S&P 500 earnings and sales remains positive: According to FactSet, estimates for 2018 were slightly higher again last week following encouraging results released to date: 17% of companies have reported. 80% beat consensus earnings estimates and 72% beat consensus sales estimates. Another 179 S&P 500 companies and 12 Dow Jones Industrial Average companies are scheduled to report this week. First quarter 2018 earnings are expected to increase 18.3% (up from 17.3% last week) on a 7.6% increase in sales (up from 7.4% last week). Second quarter 2018 earnings are expected to increase 19.0% on a 7.8% increase in sales. Third quarter earnings are expected to increase 21.0% on a 6.5% increase in sales. Fourth quarter 2018 earnings are expected to increase 16.9% on a 5.7% increase in sales. For all of 2018, earnings are expected to increase 18.5% (up from 18.4%) on a 6.8% increase in sales (up from 6.7%).
Short term political uncertainties remain, including North Korea threats, NAFTA negotiations, rising trade war fears (particularly against China) and increased scrutiny by special council on Russia's influence on the Presidential election.
Earnings and revenue prospects for 2018 are exceptional for U.S. based companies with international exposure. Consensus for S&P 500 earnings on a year-over-year are expected to increase 18.4% in 2018. Earnings will benefit significantly from weakness in the U.S. Dollar on a year-over-year basis when revenues and earnings from international operations are translated into U.S. Dollars. For example, a U.S. based company with 50% of its earnings and revenues coming from international operations will see earnings and revenues increase by 7.0% from foreign currency translation alone following the current 14.0% fall in the U.S. Dollar Index from its high at 103.82 in January 2017. The U.S. Dollar Index averaged 100 in the fourth quarter of 2016 and 101 in the first quarter of 2017.
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for April 20th 2018
Green: Increase from previous day
Red: Decrease from previous day
Technical scores are calculated as follows:
Intermediate Uptrend based on at least 20 trading days: Score 2
(Higher highs and higher lows)
Intermediate Neutral trend: Score 0
(Not up or down)
Intermediate Downtrend: Score -2
(Lower highs and lower lows)
Outperformance relative to the S&P 500 Index: Score: 2
Neutral Performance relative to the S&P 500 Index: 0
Underperformance relative to the S&P 500 Index: Score -2
Above 20 day moving average: Score 1
At 20 day moving average: Score: 0
Below 20 day moving average: -1
Up trending momentum indicators (Daily Stochastics, RSI and MACD): 1
Mixed momentum indicators: 0
Down trending momentum indicators: -1
Technical scores range from -6 to +6. Technical buy signals based on the above guidelines start when a security advances to at least 0.0, but preferably 2.0 or higher. Technical sell/short signals start when a security descends to 0, but preferably -2.0 or lower.
Long positions require maintaining a technical score of -2.0 or higher. Conversely, a short position requires maintaining a technical score of +2.0 or lower.
S&P 500 Index gained 13.84 points (0.52%) last week. Intermediate trend remains Neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending up, but Stochastics are overbought and showing early signs of rolling over.
Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 48.00 from 41.20 despite the drop on Friday. Percent is intermediate Neutral.
Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 57.60 from 56.80. Percent remains intermediate Neutral.
Bullish Percent Index for S&P 500 stocks increased last week to 54.40 from 47.40 and remained above its 20 day moving average. The Index is intermediate Neutral and trending up.
Bullish Percent Index for TSX stocks increased last week to 58.80 from 56.00 and remained above its 20 day moving average. The Index remains intermediate Neutral and trending up.
TSX Composite Index gained 210.85 points (1.77%) last week. Intermediate trend remains neutral (Score: 0). Strength relative to the S&P 500 Index returned to Neutral (Score: 0) from Negative on Friday. The Index moved above its 20 day moving average last week (Score: 1). Short term momentum indicators are trending up (Score: 1). Technical score increased last week to 2 from 0
Percent of TSX stocks trading above their 50 day moving average increased last week to 60.33 from 51.85. Percent has moved to intermediate overbought from intermediate neutral, but continues to move higher.
Percent of TSX stocks trading above their 200 day moving average increased last week to 50.41 from 46.50. Percent is intermediate neutral and trending up.
Dow Jones Industrial Average gained 102.80 points (0.42%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed last week to Neutral from Positive. The Average remains above its 20 day moving average. Short term momentum indicators are trending up, but Stochastics are overbought and showing early signs of peaking. Technical score slipped last week to 0 from 2.
Bullish Percent Index for Dow Jones Industrial stocks increased last week to 60.00 from 53.33 and remained above its 20 day moving average. The Index has moved to intermediate overbought, but continues to trend up.
Bullish Percent Index for NASDAQ Composite stocks increased last week to 57.69 from 55.68 and moved above their 20 day moving average. The Index remains intermediate neutral and trending up.
NASDAQ Composite Index gained 139.48 points (0.42%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed last week to Neutral from Negative. The Index moved back above its 20 day moving average last week. Short term momentum indicators are trending up, but are showing early signs of peaking. Technical score increased last week to 4 from 0.
Russell 2000 Index gained 14.61 points last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending up, but showing early signs of peaking. Technical score remained last week at 2.
Dow Jones Transportation Average gained 70.78 points (0.68%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed to Positive from Neutral. The Average moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.
Australia All Ordinaries Composite Index gained 39.70 points (0.67%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Negative from Neutral last week. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score was unchanged last week at -2.
The Nikkei Average gained 383.50 points (1.76%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. The Average remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.
Europe iShares added $0.20 (0.42%) last week. Intermediate trend changed to neutral from down on a move above $48.18. Strength relative to the S&P 500 Index remains Positive. Units remain above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.
Shanghai Composite Index added 12.49 points (0.40%) last week. Intermediate downtrend was confirmed on a move below 3062.74. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Index remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped to -6 from -2.
Emerging Markets iShares slipped $0.31 (0.65%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Negative. Units dropped below their 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score remained last week at 0.
Currencies
U.S. Dollar Index gained 0.57 (0.64%) with most of the gain realized on Friday. Intermediate trend remains down. The Index moved above its 20 day moving average on Friday. Short term momentum indicators turned up on Friday.
Euro dropped 0.56 (0.45%) last week. Intermediate trend remains up. The Euro moved below its 20 day moving average on Friday. Short term momentum indicators turned lower on Friday.
The Canadian Dollar dropped US 0.93 cents (1.17%) last week on signs of a slowing economy. Intermediate trend remains down. The Canuck Buck remains above its 20 day moving average. Short term momentum indicators have turned down.
Japanese Yen slipped 0.25 (0.27%) last week. Intermediate trend remains up. The Yen remains below its 20 day moving average. Short term momentum indicators are trending down.
British Pound dropped 2.29 (1.61%) last week. Intermediate trend remains up. The Pound moved below its 20 day moving average. Short term momentum indicators have turned down.
Commodities and Related ETFs
Daily Seasonal/Technical Commodities Trends for April 20th 2018
Green: Increase from previous day
Red: Decrease from previous day
* Excludes adjustment from rollover of futures contracts
CRB Index gained 2.60 points (1.30%) last week. Intermediate uptrend was confirmed on a move above 201.19 to a 30 month high. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.
Gasoline added 3 cents per gallon (1.45%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Gas remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.
Crude Oil gained $1.01 per barrel (1.50%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Crude remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.
Natural Gas added $0.01 per MBtu (0.37%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Positive. "Natty" moved back above its 20 day moving average on Friday. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 2.
S&P Energy Index added 13.73 points (2.60%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Index remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.
Philadelphia Oil Services Index gained 3.08 points (2.04%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.
Gold dropped $9.60 per ounce (0.71%) last week. Intermediate trend remains up. Strength relative to the S&P 5 00 Index changed to Neutral from Positive. Gold dropped below its 20 day moving average on Friday (triggered by U.S. Dollar Index strength). Short term momentum indicators have turned down. Technical score dropped last week to 0 from 6.
Silver gained $0.50 per ounce (3.00%) last week. Intermediate trend changed to Neutral from Down on a move above $16.95. Strength relative to the S&P 500 Index remains Positive. Silver remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.
AMEX Gold Bug Index added $0.75 (0.41%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.
Platinum dipped $0.30 (0.14%) last week. Trend remains down. Relative strength remains Neutral. PLAT dropped below its 20 day MA on Friday. Momentum turned down.
Palladium gained $49.25 per ounce (5.02%) last week. Relative strength remains Positive. Remains above its 20 day MA. Short term momentum indicators are trending up.
Copper added 6.4 cents per lb (2.08%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Positive. Copper remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score slipped last week to 0 from 2.
BMO Base Metals ETF gained $0.44 (3.79%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. Units remain above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.
Lumber gained $21.80 (4.14%) last week. Trend remains up. Relative strength remains positive. Units trade above their 20 day MA. Short term momentum indicators are trending up.
Grain ETN dropped $0.67 (2.51%) last week. Trend remains up. Relative strength turned Negative. Units dropped below their 20 day MA on Friday. Momentum: trending down.
Agriculture ETF added $0.29 (0.47%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Units remained above their 20 day moving average. Short term momentum indicators are trending up, but are overbought and showing early signs of peaking. Technical score remained last week at 6.
Interest Rates
Yield on 10 year Treasuries increased 12.2 basis points (4.31%) last week. Intermediate uptrend was confirmed on Friday when yield moved above 2.943% reaching a 4 year high. Yield remained above its 20 day moving average. Short term momentum indicators are trending up.
Conversely, price of the long term Treasury ETF dropped $2.44 (2.02%) last week. Intermediate trend remains up. Units dropped below their 20 day moving average on Friday.
Volatility
The VIX Index dropped 0.61 (3.50%) last week. The Index remained below its 20 day moving average. Short term momentum indicators are trending down.
Sectors
Daily Seasonal/Technical Sector Trends for April 20th 2018
Green: Increase from previous day
Red: Decrease from previous day
StockTwits Released on Friday @EquityClock
Rogers Communications $RCI $RCI.B.CA, a TSX 60 stock moved above $59.61 completing a base building pattern.
Cascades $CAS.CA moved below $13.04 extending an intermediate downtrend.
Technical action by S&P 500 stocks to 10:00: Bearish. No intermediate breakouts. Breakdowns: $MAT $TAP $SWK $SWKS, KHC.
Editor's Note: After 10:00 AM EDT, no breakouts. Breakdowns: XRX, CPB, CHD, MDLZ, HCP, KIM, VTR, REGN, SPG, FRT, URI, ALXN, GIS, AAP, HAS
Stantec $STN.CA moved above $31.95 completing a double bottom pattern.
Consumer Staples SPDRs $XLP moved below $50.81 extending an intermediate downtrend. Individual breakdowns: $TAP $CPB $CHD $MDLZ
Editor's Note: Later, GIS, CL and AAP joined the list.
Canada #Retail Sales down 4.7% (NSA) in February versus average decline of 4.4% #CDNecon #CAD $MACRO
Canada CPI up 1.6% in the first quarter, firmly above the 1.5% gain that is average. #inflation #CDNecon #CAD $MACRO
Margin debt showing second weakest first quarter change in a decade. equityclock.com/2018/04/20/… $SPX $DJIA $COMPQ $STUDY
Disclaimer: Seasonality and technical ratings offered in this report and at
www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed
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