Tech Talk for Monday April 30th 2018

U.S. equity index futures were higher this morning. S&P 500 futures were up 6 points in pre-opening trade.

Index futures were virtually unchanged following release of economic news at 8:30 AM EDT. Consensus for March Personal Income was an increase of 0.4% versus a gain of 0.4% in February. Actual was an increase of 0.3%. Consensus for March Personal Spending was an increase of 0.2% versus a gain of 0.4% in February. Actual was an increase of 0.4%.

First quarter reports continue to pour in. Companies that reported this morning included McDonalds, First Data, Cooper Tires, WPP, AK Steel, Arconic and Allergan.

McDonalds gained $6.78 to $165.08 after reporting higher than consensus first quarter sales and earnings.

Sprint fell $0.85 to $and T-Mobile dropped $1.52 to $63.00 after they announced a merger. Wells Fargo downgraded both stock to Market Perform from Outperform.

Andeavor gained $15.52 to $137.900 on news that Marathon Petroleum has offered to purchase the company at a cost of $35.6 billion.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/04/27/stock-market-outlook-for-april-30-2018/

Note seasonality charts on the Utilities sector and the Distillers & Vintners industry.

WALL STREET RAW RADIO

WITH HOST, MARK LEIBOVIT AND GUESTS DON VIALOUX, HARRY BOXER AND SINCLAIR NOE - 

APRIL 28, 2018

https://tinyurl.com/ycoo4wv4

The Bottom Line

It's time to take money off the table if you own U.S. equities. Last week was revealing. First quarter results by a wide variety of U.S. companies for the most part exceeded consensus sales and earnings estimates. Analysts increased their consensus first quarter earnings estimate for S&P 500 from a gain of 18.5% to a gain of 23.2% and boosted consensus estimates for the remainder of the year. Yet, unless results were spectacular such as Amazon, traders started to take profits on news.

Next week effectively is the end of the first quarter earnings report season for major U.S. companies. Look for more profit taking on news.

U.S. equity markets have a history of reaching a seasonal peak at this time of year. In 1991 in my CMT designation paper, I wrote about this phenomenon by coining the phrase, "Buy when it snows (in late October), Sell when it goes (in late April). The first week in May historically also is the week when many equity markets, commodities and sectors change their seasonality from Positive to Neutral/Negative. See seasonality rating changes later in this report.

The phrase is particularly relevant in U.S. Mid-term election years. Volatility in equity markets increases from late April to mid-October due to concerns about a possible change in political control in Congress. These concerns are very real this year. Republicans control the House by 16 votes and the Senate by one vote. On average during a Mid-term election year, the controlling party loses 24 House seats to the opposition party. Anticipation of a possible change, regardless of the final result, is a major reason for a correction in North American equity markets between next week and October.

Economic News This Week

March Personal Income to be released at 8:30 AM EDT on Monday is expected to increase 0.4% versus a gain of 0.4% in February. March Personal Spending is expected to increase 0.4% versus a gain of 0.2% in February.

April Chicago PMI to be released at 9:45 AM EDT on Monday is expected to increase to 57.8 from 57.4 in March

April ISM Manufacturing Index to be released at 10:00 AM EDT on Tuesday is expected to slip to 58.5 from 59.3 in March.

Canadian February Real GDP to be released at 8:30 AM EDT on Tuesday is expected to increase 0.3% versus a gain of 0.1% in January.

March Construction Spending to be released at 10:00 AM EDT on Tuesday is expected to increase 0.5% versus a gain of 0.1% in February..

ADP April Employment to be released at 8:15 AM EDT on Wednesday is expected to drop to 193,000 from 241,000 in March.

FOMC Meeting Results are expected to be released at 2:00 PM EDT on Wednesday. No change on the Fed Fund Rate currently at 1.50%-1.75% is anticipated.

March U.S. Trade Deficit to be released at 8:30 AM EDT on Thursday is expected to drop to $50 billion from $57.6 billion in February

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 220,000 from 209,000 last week.

March Canadian Merchandise Trade Deficit to be released at 8:30 AM EDT on Thursday is expected to drop to $2.0 billion from $2.7 billion in February.

March Factory Orders to be released at 10:00 AM EDT on Thursday are expected to increase 1.3% versus a gain of 1.2% in February.

April ISM Services to be released at 10:00 AM EDT on Thursday are expected to slip to 58.0 from 58.8 in March.

April Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to increase to 185,000 from 103,000 in March. April Unemployment Rate is expected to slip to 4.0% from 4.1% in March. April Hourly Earnings are expected to increase 0.2% versus a gain of 0.3% in March.

Earnings News This Week

Observations

Technical action by individual S&P 500 stocks was quietly bearish last week. Number of stocks breaking resistance totaled 35 while number of stocks breaking support totaled 58. Notably, industrial stocks were on the list of breakdowns and utilities stocks were on the list of breakouts. The Up/Down ratio was virtually unchanged last week at (203/238=) 0.85.

U.S. economic news this week will focus on the FOMC meeting announcement on Wednesday and the April employment report on Friday.

Canadian economic news this week is on the GDP report on Tuesday and the Merchandise Trade Deficit on Thursday.

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, but show early signs of peaking

Medium term technical indicators in Canada also remained in upward trends last week, but are overbought.

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 in U.S. equity markets normally peak this week, particularly in mid-term U.S. election years. Seasonal influences in Canadian equity markets frequently remain neutral/positive to early June. Thereafter, they turn negative. See charts below:

The outlook for S&P 500 earnings and sales remains positive: According to FactSet, estimates for 2018 were raised significantly last week following encouraging results released to date: 53% of companies have reported. 79% beat consensus earnings estimates and 74% beat consensus sales estimates. Another 142 S&P 500 companies and 5 Dow Jones Industrial Average companies are scheduled to report this week. First quarter 2018 earnings are expected to increase 23.2% (up from 18.3% last week) on an 8.4% increase in sales (up from 7.6% last week). Second quarter 2018 earnings are expected to increase 19.1% (up from 19.0%) on a 8.2% increase in sales (up from 7.8%). Third quarter earnings are expected to increase 21.2% (up from 21.0%) on a 7.0% increase in sales (up from 6.5%). Fourth quarter 2018 earnings are expected to increase 17.1% (up from 16.9%) on a 6.0% increase in sales (up from 5.7%). For all of 2018, earnings are expected to increase 19.4% (up from 18.5%) on a 7.2% increase in sales (up from 6.8%).

Short term political uncertainties remain NAFTA negotiations, rising trade war fears (particularly against China) and increased scrutiny by special council on Russia's influence on the Presidential election. In addition, Mid-term election political rhetoric normally starts to ramp up in May culminating in October.

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 19.4% 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 6.0% from foreign currency translation alone following the current 12.0% 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 27th 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 slipped 0.23 (0.01%) last week. Intermediate trend remains down. The Index remained above its 20 day moving average last week. Short term momentum indicators have turned down.

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 50.40 from 48.00. Percent remains intermediate neutral.

Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 58.80 from 57.60. Percent remains intermediate neutral.

Bullish Percent Index for S&P 500 stocks slipped last week to 52.60 from 54.40, but remained above its 20 day moving average. The Index remains intermediate neutral.

Bullish Percent Index for TSX stocks slipped last week to 58.40 from 58.80, but remained above its 20 day moving average. The Index remains intermediate neutral.

TSX Composite Index gained 184.61 points (1.19%) last week. Intermediate trend remains neutral (Score: 0). Strength relative to the S&P 500 Index changed to Positive from Neutral (Score: 2). The Index remains above its 20 day moving average (Score: 1). Short term momentum indicators are trending up (Score: 1). Technical score increased last week to 4 from 2.

Percent of TSX stocks trading above their 50 day moving average increased last week to 65.15 from 60.33. Percent remains intermediate overbought, but continues to trend higher.

Percent of TSX stocks trading above their 200 day moving average increased last week to 52.70 from 50.41. Percent remains intermediate neutral.

Dow Jones Industrial Average dropped 151.75 points (0.62%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed last week to Negative from Neutral. The Average dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 0.

Bullish Percent Index for Dow Jones Industrial stocks slipped last week to 56.67 from 60.00, but remained above its 20 day moving average. The Index has returned to intermediate neutral from intermediate overbought.

Bullish Percent Index for NASDAQ Composite stocks dropped last week to 55.87 from 57.69, but remained above its 20 day moving average. The Index remains intermediate neutral.

The NASDAQ Composite Index dropped 26.33 points (0.37%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. The Index remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score slipped last week to 2 from 4.

Russell 2000 Index dropped 7.88 points (0.50%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Index remained above its 20 day moving average. Short term momentum indicators are trending down dropped last week to -2 from 2.

Dow Jones Transportation Average added 109.13 points (1.05%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Average recovered back to its 20 day moving average on Friday. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 4.

Australia All Ordinaries Composite Index gained 78.50 points (1.32%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed last week to Positive from Negative. The Index remains above its 20 day moving average. Short term momentum indicators remain up. Technical score increased last week to 2 from -2.

Nikkei Average gained 305.63 points (1.38%) 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 dropped $0.14 (0.29%) last week. Intermediate trend remains neutral .Strength relative to the S&P 500 Index remains Positive. Units remain above their 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 2 from 4.

The Shanghai Composite Index added 10.69 points (0.35%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. The Index remains below its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to -4 from -6.

Emerging Markets iShares were unchanged last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. Units remain below their 20 day moving average. Short term momentum indicators turned back up on Friday. Technical score remained last week at 0.

Currencies

The U.S. Dollar Index jumped 1.27 (1.41%) last week. Intermediate trend changed to up from down on a move above 90.89. The Index remained above its 20 day moving average. Short term momentum indicators are trending up.

Euro dropped 1.51 (1.23%) last week. Intermediate trend changed to down from up on a move below 121.55. The Euro remained below its 20 day moving average. Short term momentum indicators are trending down.

Canadian Dollar dropped US 0.51 cents (0.65%) last week. Intermediate trend remains down. The Canuck Buck dropped below its 20 day moving average. Short term momentum indictors are trending down.

Japanese Yen dropped 1.33 (1.47%) 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 2.34 (1.67%) last week. Intermediate trend remains up. The Pound dropped below its 20 day moving average. Short term momentum indicators are trending down.

Commodities and Related ETFs

Daily Seasonal/Technical Commodities Trends for April 27th 2018

Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

The CRB Index slipped 0.35 points (0.17%) 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.

Gasoline added $0.03 per gallon (1.43%) 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 slipped $0.30 per barrel (0.44%) 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 $0.03 per MBtu (1.09%) last week. Intermediate trend changed to up from down on a move above 2.811. Strength relative to the S&P 500 Index changed to Positive from Neutral. "Natty" remained above its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 6 from -2.

S&P Energy Index gained 3.30 points (0.61%) 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.

Philadelphia Oil Services Index gained 2.38 points (1.54%) 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 $14.90 per ounce (1.11%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral to Negative last week. Gold remained below its 20 day moving average. Short term momentum indicators continued to trend down. Technical score dropped last week to -2 from 0

Silver dropped $0.66 per ounce (3.85%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed last week to Neutral from Positive. Short term momentum indicators have turned down. Technical score dropped last week to -2 from 4.

AMEX Gold Bug Index dropped 2.14 points (1.16%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Index remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to 2 from 6.

Platinum dropped $16.40 per ounce (1.76%) last week. Trend remains down. Relative strength changed to Negative. PLAT moved below its 20 day MA. Momentum: Down

Palladium dropped $67.20 per ounce (6.52%) last week. Trend remains down. Relative strength changed to Neutral from Positive. PALL dropped below its 20 day MA. Momentum: Down.

Copper dropped 8.9 cents per lb. (2.84%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed on Friday to Neutral from Positive. Copper dropped below its 20 day moving average on Friday. Short term momentum indicators have turned down. Technical score dropped last week to -4 from 0.

BMO Base Metals ETF dropped $0.61 (5.06%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Neutral. Units dropped moved below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 2.

Lumber gained $22.70 (4.14%) last week. Trend remains up. Relative strength remains Positive. Lumber remains above its 20 day MA. Momentum indicators are trending up.

Grain ETN gained $0.97 (3.73%) last week. Trend remains up. Relative strength turned to Neutral from Negative. Units moved above their 20 day MA. Momentum turned up.

Agriculture ETF added $0.25 (0.40%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Units remain above their 20 day moving average. Short term momentum indicators have turned down. Technical score slipped last week to 4 from 6.

Interest Rates

Yield on 10 year Treasuries gained 0.6 basis points (0.20%) last week, but briefly moved above 3.00%. Intermediate trend changed to up from down on a move above 2.943%. Yield remains above its 20 day moving average. Short term momentum indicators are trending up.

Price of the long term Treasury ETF added 0.43 (0.36%) last week. Units remain below their 20 day moving average.

Volatility

The VIX Index dropped 1.39 (8.27%) last week. The Index remains below its 20 day moving average.

Sectors

Daily Seasonal/Technical Sector Trends for April 27th 2018

Green: Increase from previous day

Red: Decrease from previous day

StockTwits Released on Friday @EquityClock

Technical action by S&P 500 stocks to 10:00: Bullish. Breakouts: $EXPE $JWN $MAT $ROST $TJX $AEE $SIVB. Breakdowns: $DISH $CMCSA $AMT

Editor's Note: After 10:00 AM EDT, breakouts included DLR, VTR, DTE, KIM, SYK, AFL, EQIX and CTL. Breakdowns: EFX and COL.

Detour Gold $DGC.CA dropped below $11.48 extending an intermediate uptrend.

IGM Financial $IGM.CA moved above $39.94 setting intermediate

Laurentian Bank $LB.CA moved above $49.66 setting an intermediate uptrend.

Constellation Software $CSU.CA, a TSX 60 stock moved above $915.87 to an all-time high extending an intermediate uptrend.

TMX Group $X.CA moved above $79.09 to an all-time high extending an intermediate uptrend.

Editor's Note: Ironically, trading on the TSX was halted on Friday afternoon when the exchange encountered technical problems.

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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