Tech Talk for Monday April 29th 2024
U.S. equity index futures were higher this morning. S&P 500 futures added 12 points at 8:30 AM EDT.
Apple advanced $3.34 to $172.64 after Bernstein upgraded the stock to Buy.
Southwest Airlines dropped $0.34 to $26.69 after Jefferies downgraded the stock.
![clip_image002[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2024/04/clip_image0025-6.png "clip_image002[5]")
Domino's Pizza added $22.93 to $522.00 after reporting higher than consensus first quarter earnings.
Tesla added $15.16 to $183.30 after receiving approval in China for launch of autonomous cars.
![clip_image004[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2024/04/clip_image0045-6.png "clip_image004[5]")
The Bottom Line
Focus this week in on the Federal Reserve's decision on interest rates announced on Wednesday at 2:00 PM EDT. Consensus calls for no change in the Fed Fund Rate currently at 5.25%-5.50%. The question is "How long will the Fed maintain this rate?" Release of a slightly "hotter than consensus" March core PCE Price Index on Friday suggests that timing of a reduction of the Fed Fund rate has been delayed until at least this fall.
Better than consensus quarterly results released last week by several large cap S&P 500 companies prompted analysts to raise estimates for the S&P 500 for the remainder of 2024.
"Sell in May and Go Away"? Following are notes developed prior to my appearance on "Wolf on Bay Street" last Saturday. The notes discuss the strategy and its likely outcome this year:
"Sell in May and go away"? That's the expression used by seasonality analysts projecting a seasonal peak by the S&P 500 near the beginning of May followed by weakness to the end of September. According to www.EquityClock.com , average return per period during the past 20 years from May 1st to September 30th has been only 0.8%. In contrast, average return per period from end of September to the beginning of April was 7.2%. Should you "Sell in May and go away" this year?
Not quite! Start and end dates for the seasonal trade vary slightly each year. This year, start of the seasonal peak was earlier than usual: March 28th when the Index reached a high at 5,265. The Index subsequently dropped 6.0% by April 19th to a low of 4,954.
Although historic returns by the S&P 500 Index from May to September are lower than average, opportunities to invest in selected Exchange Traded Funds and securities are available. U.S. sectors, that have a history of outperforming the S&P 500 Index with positive returns during the May to September period, include Healthcare, Biotech, Technology, Oil Exploration, Gold and long term U.S. government bonds. In Canada, the Canadian Banks are a notable outperformer
What about seasonality for the TSX Composite Index? Seasonal influences for the TSX Composite are slightly different relative to the S&P 500 Index: Average seasonal peak during the past 20 year for the TSX occurred at the end of May instead of the end of April. Average seasonal trough for the TSX occurred at the end of September, same as the S&P 500 Index. Average return per period from end of May to end of September was -1.0%. During the favourable period from the end of September to the end of May, average return per period was +7.0%. The extended period of seasonal strength to the end of May can be attributed to seasonal strength in commodity prices and related equities, notably energy prices.
What about performance of the TSX Composite relative to the S&P 500 Index in May this year? Prospects for outperformance by the TSX Composite Index are above average: The Index started to outperform the S&P 500 Index at the beginning of April. Major reasons were higher commodity prices realized by Canadian producers as well as weakness in the Canadian Dollar relative to the U.S. Dollar in the first quarter. Canadian producers are benefitting from recent strength in crude oil, copper, gold and silver prices. Analysts have been prompted recently to raise their cash flow and earnings estimates.
Editor's Note: China also was mentioned during the interview. China is a major importer of Canadian commodities. See chart on China iShares below.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.FactSet.com
Higher than consensus first quarter results released to date prompted analysts to increase significantly their first quarter estimates. Consensus on a year-over-year basis calls for an earnings increase of 3.5% (versus a 0.5% increase last week). Revenues are expected to increase 4.4% (versus a 3.5% increase last week).
Earnings gains accelerate in the second and third quarters. Consensus for the second quarter calls for a 9.7% earnings increase (versus 9.6% last week) and a 4.4% increase in revenues.. Consensus for the third quarter calls for an 8.6% increase in earnings (versus previous 8.7% increase) and a 4.9% increase in revenues (versus a previous 5.0% increase).
Earnings gains continue in the fourth quarter. Consensus for the fourth quarter calls for a 10.8% increase in earnings (versus previous 10.7% increase) and a 4.9% increase in revenues (versus previous 5.0%)
For all of 2024, consensus calls for a 10.8% earnings increase (versus previous 10.7% increase) and a 4.9% increase in revenues (versus previous 5.0% increase)
Earnings estimates for fiscal 2025 were increased slightly. Consensus calls for a 13.9% earnings increase (versus previous 13.8% increase) and a 5.8% revenue increase (versus previous 5.9% increase).
Economic News This Week
Source: www.Investing.com
April ISM Manufacturing PMI released at 10:00 AM EDT on Wednesday is expected to slip to 50.0 from 50.3 in March.
FOMC Decision on the Fed Fund Rate is released at 2:00 PM EDT on Wednesday. No change from the current 5.25%-5.50% rate is expected.
March U.S. Trade released at 8:30 AM EDT on Thursday is expected to slip to a deficit of $68.00 billion from $68.9 billion in February.
March Canadian Trade is released at 8:30 AM EDT on Thursday
March U.S. Factory Orders are released at 10:00 AM EDT on Thursday
April Non-farm Payrolls released at 8:30 AM EDT on Friday are expected to drop to 210,000 from 303,000 in March. April Unemployment Rate is expected to remain unchanged from March at 3.8%. April Average Hourly Earnings are expected to increase 0.3% versus a gain of 0.3% in March.
April ISM non-manufacturing PMI released at 10:00 AM on Friday is expected to increase to 52.3 from 51.4 in March.
Selected Earnings News This Week
Source: www.Investing.com
Forty six percent of S&P 500 companies have reported quarterly results to date. Another 35% are scheduled to release results this week (including six Dow Jones Industrial Average companies).
Eight TSX 60 companies are scheduled to release quarterly results.
Trader's Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for April 26th 2024
Green: Increase from previous day
Red: Decrease from previous day
Source for all positive seasonality ratings: www.EquityClock.com
Commodities
Daily Seasonal/Technical Commodities Trends for April 26th 2024
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for April 26th 2024
Green: Increase from previous day
Red: Decrease from previous day
Links offered by valued providers
Spotting Downturns: Daily or Weekly Charts? David Teller
Spotting Downturns: Daily or Weekly Charts? - YouTube
S&P 500 should end 2024 at current levels around our price target of 5,100, says BMO’s Brian Belski
Nature Takes Its Course In Markets: Guy Adami and Danny Moses
(Note comments on gold and commodities near the end of this link).
Nature Takes Its Course In Markets - YouTube
S&P 500 Makes a New All-Time High By End of June? David Teller
S&P 500 Makes a New All-Time High By End of June? | The Mindful Investor | StockCharts.com
Mike's Money Talks for April 27th by Michael Campbell
Michael Campbell's MoneyTalks - Complete Show (mikesmoneytalks.ca)
Weekly Update with Larry Berman – April 27, 2024
https://www.youtube.com/watch?v=ivZo_3Y-fXY
Big reversal patterns following profit reports: Mark Leibovit
Big Reversal Patterns Following Profit Reports - HoweStreet
Stock Markets, Gold, Oil, USD, Canadian Dollar, Interest Rates, China, Japan, Listener Questions: Bob Hoye
This Week in Money - HoweStreet
Trading Desk Notes For April 27, 2024: Victor Adair
Trading Desk Notes For April 27, 2024 - HoweStreet
Technical Scoop from David Chapman and www.EnrichedInvesting.com
Technical Scores
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
Changes Last Week
Technical Notes for Friday
China rises! China large cap iShares moved above $24.89 last week completing a reverse Head & Shoulders pattern. Measured target is $28.80. The breakout also is positive encouragement for Canada's commodity producers that export to China!
BMO Global Base Metals ETF $ZMT.TO moved above Cdn$66.45 to a 12 year high extending an intermediate uptrend.
Colgate Palmolive $CL an S&P 100 stock moved above $89.85 to an all-time high extending an intermediate uptrend.
General Motors $GM an S&P 100 stock moved above $46.04 extending an intermediate uptrend.
Microchip Technology $MCHP a NASDAQ 100 stock moved above $94.19 to an all-time high extending an intermediate uptrend.
Abbvie $ABBV an S&P 100 stock moved below $160.00 extending an intermediate downtrend.
S&P 500 Momentum Barometers
The intermediate term Barometer added 3.00 on Friday and 8.80 last week to 45.80. It changed from Oversold to Neutral on a recovery above 40.00.
The long term barometer slipped 1.00 on Friday but added 3.40 last week to 74.20. It remains Overbought.
TSX Momentum Barometers
The intermediate term Barometer added 1.79 on Friday and gained 3.13 last week to 55.36. It remains Neutral.
The long term Barometer added 0.45 on Friday and gained 1.78 last week to 66.96. It remains Positive.
Disclaimer: Seasonality ratings 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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