Tech Talk for Monday July 1st 2024
The stage is set for the Summer Rally. See comments below
Economic News This Week
Source: www.Investing.com
June ISM Manufacturing PMI released at 10:00 AM EDT on Monday is expected to increase to 49.2 from 48.7 in May.
May U.S. Construction Spending released at 10:00 AM EDT on Monday is expected to increase 0.3% versus a decline of 0.1% in April.
Federal Reserve Chairman Powell speaks to Congress at 9:30 AM EDT on Tuesday.
U.S. May Trade Balance released at 8:30 AM EDT on Wednesday is expected to be a deficit of $76.00 billion versus a deficit of $74.60 billion in April.
Canadian May Trade Balance released at 8:30 AM EDT on Wednesday is expected to be a deficit of $1.20 billion versus a deficit of $1.05 billion in April.
May U.S. Factory Orders are released at 10:00 AM EDT on Wednesday
June ISM Non-Manufacturing PMI released at 10:00 AM EDT on Wednesday is expected to slip to 52.5 from 53.8 in May.
June U.S. Non-farm Payrolls released at 8:30 AM EDT on Friday are expected to drop to 189,000 from 272,000 in May. June Unemployment Rate is expected to remain unchanged from May at 4.0%. Average Hourly Earnings are expected to increase 0.3% versus a gain of 0.4% in May.
June Canadian Employment released at 8:30 AM EDT on Friday is expected to slip to a gain of 24,500 from 26,700 in May. June Unemployment Rate is expected to increase to 6.3% from 6.2% in May.
Selected Earnings News This Week
Wednesday: Constellation Brands
Notes for Michael Campbell:
June 28th 2024
Don Vialoux appeared on Michael Campbell's Money Talks podcast on Saturday. Following are notes developed prior to the interview:
Will a "Summer Rally" happen this year? Traditionally, the Summer Rally in North American equity markets occurs between the last week in June and the end of July. . Average gain per period for the "Summer Rally" for the S&P 500 Index during the past 20 periods was 2.3%. The trade was profitable in 15 of the past 20 periods.
Recording of the "Summer Rally" has been slightly different during U.S. Presidential Election years (like 2024). Based on 73 years of data for the Dow Jones Industrial Average since 1950, the Summer Rally during Presidential Election years started at the same time in the last week in June, but continued until mid-August. Average return per period for the past 17 periods was 2.5%. Indices moved higher in anticipation of adoption of the next President's proposed economic agenda.
Closely related to the "Summer Rally" for U.S equity indices during U.S. Presidential Election years is the Summer Olympic Game: In most cases, both are held in the same year. U.S. equity indices have a history of moving higher in the month prior to the start of the Summer Olympics. This year, the summer Olympic Games in Paris France are scheduled to start on July 26th. Sectors most impacted by anticipation of the Olympic Games include communication providers (e.g. Comcast, Disney, Meta Platform and Alphabet) and travel accommodators (e.g. Bookings Holdings). All recently have shown encouraging technical signs by recording positive strength relative to the S&P 500.
The TSX Composite Index also has a history of moving higher from late June to the end of July. The trade has been profitable in 14 of the past 20 periods. Average return per period was 1.8%.
What about this year? U.S. equities are expected to benefit from accelerating earnings growth. Consensus for earnings by S&P 500 companies calls for an 8.8% year-over-year increase in the second quarter versus a gain of only 5.9% in the first quarter. Gains further accelerate in the second half: Consensus calls for an 8.2% gain in the third quarter and 17.6% in the fourth quarter. Gains continue in 2025. Consensus calls for 15.4% year-over-year earnings gain in 2025.
The earnings picture for TSX Composite companies in the second quarter also is favourable, but less positive than the U.S. TSX 60 companies scheduled to report year-over-year earnings gains in excess of 20% in the second quarter include Shopify, Canadian Natural Resources, Constellation Software, Barrick Gold, Cenovus Energy, Pembina Pipelines and Imperial Oil. Notable is strength projected for Canadian natural resource companies that are expected to benefit from higher commodity prices in U.S. dollars on a year-over-year basis: WTI crude oil has gained 16%, copper has gained 18%, gold has advanced 20% and silver has jumped 29%. In addition, Canadian natural resource companies have benefited from a year-over-year 8% increase in the U.S. Dollar relative to the Canadian Dollar.
The "Summer Rally" in North American equity prices could start as early as the end of June if the May Core PCE Price Index released on Friday at 8:30 AM EDT is favourable. This Index is the Federal Reserve's best measure of inflation. Consensus calls for a 2.7% *year-over-year increase, down from a 2.8% rate in April. A continuing downtrend in the Index will encourage the Federal Reserve to lower its Fed Fund Rate currently at 5.25%-5.50% as early as its next FOMC meeting on July 31st and more probably by its following meeting on September 18th. In turn, lending rates by major U.S. banks will drop, economic activity will turn more positive and investors will want to own more equities.
*Actual: 2.6%
Trader's Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for June 28th 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 June 28th 2024
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for June 28th 2024
Green: Increase from previous day
Red: Decrease from previous day
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
Natural Gas ETN $UNG moved below $17.39 completing a double top pattern.
Corn ETN $CORN dropped below $18.72 to a three year low extending an intermediate downtrend.
FedEx $FDX an S&P 100 stock moved above $301.18 to an all-time high extending an intermediate uptrend
Tesla $TSLA a NASDAQ 100 stock moved above $198.87 completing a reverse Head & Shoulders pattern
Nike $NKE a Dow Jones Industrial Average stock moved below $88.42, $87.71 and $80.32 extending an intermediate downtrend. Fiscal fourth quarter results were below consensus.
Travelers $TRV a Dow Jones Industrial Average stock moved below $201.60 completing a double top pattern.
Visa $V a Dow Jones Industrial Average stock moved below $266.01 extending an intermediate downtrend.
Restaurant Brands International $QSR.TO a TSX 60 stock moved above Cdn$96.79 completing a double bottom pattern.
Links offered by valued providers
Michael Campbell's Money Talks for June 29th
June 29th Episode (mikesmoneytalks.ca)
Are the markets about to pull back? Mark Leibovit
https://www.howestreet.com/2024/06/are-the-markets-about-to-pull-back-mark-leibovit/
The 4 BEST Tech STOCKS to Watch Now! David Keller
The 4 BEST Tech STOCKS to Watch Now! - YouTube
Mike Wilson's S&P 500 Outlook and Economic Warning
Mike Wilson's S&P 500 Outlook and Economic Warning - YouTube
Stocks sell off into elections, rebound after: investment strategist: Alec Young Mapsignals
Editor's Note: See chart showing S&P 500 performance during Presidential election years
Stock sell off into elections, rebound after: investment strategist - YouTube
The top 15 contributors to EPS growth in the second quarter
The Top 15 contributors to EPS growth for the second quarter – UBS | Seeking Alpha
Fed should 'tee up' rate cut after cooling in PCE inflation: Wharton's Jeremy Siegel
Fed should 'tee up' rate cut after cooling in PCE inflation: Wharton's Jeremy Siegel | Seeking Alpha
Governments Ignoring the Dangers of Deficits: Bob Hoye
Governments Ignoring the Dangers of Deficits - HoweStreet
Canadian Unemployment and Bankruptcies Surging: Danialle Park
Canadian Unemployment and Bankruptcies Surging - HoweStreet
Trading Desk Notes For June 29, 2024: Victor Adair
Trading Desk Notes For June 29, 2024 - HoweStreet
Total US Energy Stocks Rose 9.4 MB Last Week. WTI Crude Should Breach US$80/B in the Coming Days: Josef Schachter
Technical Scoop from David Chapman and www.EnrichedInvesting.com
S&P 500 Momentum Barometers
The intermediate term Barometer slipped 1.60 on Friday and dropped 4.80 to 48.80. It remains Neutral.
The long term Barometer added 1.20 on Friday and slipped 1.20 last week. It remains Overbought.
TSX Momentum Barometers
The intermediate term Barometer dropped 1.77 on Friday but gained 15.39 last week to 46.02
It changed last week from Oversold to Neutral on a recovery above 40.00.
The long term Barometer added 0.44 on Friday and advanced 9.1 last week to 66.37. It changed from Neutral to Overbought on a recovery back above 60.00.
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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