Tech Talk for Monday June 11th 2018

U.S. equity index futures were mixed this morning. S&P 500 futures were unchanged in pre-opening trade.

The Canadian Dollar dropped $0.45 to U.S. $76.87 following the war of words by President Trump and Prime Minister following the G7 meeting.

Ingersoll Rand (IR $90.69) is expected to open higher after the company raised its dividend by 18%.

International Flavours and Fragrances (IFF $126.41) is expected to open lower after Stifel Nicolaus lowered its target price to $135 from $146

Newell Brands added $0.60 to $25.28 after the company added $2.5 billion to its stock repurchase program.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/06/08/stock-market-outlook-for-june-11-2018/

Note seasonality charts on Canadian Employment, Motor Vehicle Retail Sales, Wholesale Sales and Wholesale Inventories.

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The Bottom Line

U.S. equity markets recorded an unexpected advance last week despite their intermediate overbought levels. Moreover, short term technical indicators turned back up. However, U.S. equity markets have a history of reaching a seasonal peak at this time of year when intermediate momentum turns from Positive to Neutral/Negative. Seasonal influences subsequently turn Negative in the third week in July and reaches a bottom in mid-October.

Seasonal influences are particularly relevant during 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 late April and October.

Seasonal influences for Canadian equity markets follow a similar pattern. They normally peak near the beginning of June, turn neutral until mid-July and turn negative until mid-October. Short and intermediate technical indicators for the Canadian equity market remain overbought and are showing early signs of peaking. Data shows that the TSX Composite Index has advanced in 13 of the past 20 periods from June 1st to October 12th. However, the seven drops in the past 20 periods were significant: five of the seven drops exceeded 12%. Accordingly, caution by equity investors is advised. Current technical, seasonal and fundamental considerations suggest that a 12% + correction by the TSX Composite Index this summer is higher than average.

Economic News This Week

May Consumer Price Index to be released at 8:30 AM EDT on Tuesday is expected to increase 0.2% versus a gain of 0.2% in April. Excluding food and energy, May Consumer Price Index is expected to increase 0.2% versus a gain of 0.1% in April.

May Producer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.3% versus 0.1% in April. Excluding food and energy, May Producer Price Index is expected to increase 0.2% versus 0.2% in April.

FOMC meeting results are released at 2:00 PM EDT. A 0.25% increase in the Fed Fund rate is widely expected. The Federal Reserve chairman has a press conference at 2:30 PM EDT

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 224,000 from 222,000 last week..

May Retail Sales to be released at 8:30 AM EDT on Thursday are expected to increase 0.4% versus a gain of 0.2% in April. Excluding auto sales, May Retail Sales are expected to increase 0.5% versus a gain of 0.3% in April.

April Business Inventories to be released at 10:00 AM EDT on Thursday are expected to increase 0.3% versus no change in March.

Quadlruple Witching occurs on Friday.

June Empire State Manufacturing Survey to be released at 8:30 AM EDT on Friday is expected to slip to 19.6 from 20.1 in May.

May Industrial Production to be released at 9:15 AM EDT on Friday is expected to increase 0.3% versus a gain of 0.7% in April. May Capacity Utilization is expected to increase to 78.1 from 78.0 in April.

June Consumer Sentiment Index to be released at 10:00 AM EDT on Friday is expected to increase to 98.7 from 98.0 in May.

Earnings News This Week

Monday: Hewlett Packard Enterprises

Tuesday: H&R Block

Wednesday: Canada Goose

Thursday: Adobe

Observations

Technical action by individual S&P 500 stocks was bullish last week. Number of stocks breaking intermediate resistance totaled 69 while number of stocks breaking support totaled 26 (including 17 utility stocks). Notably, consumer discretionary, industrial and financial stocks were on the list of breakouts. The Up/Down ratio advanced last week to (246/196=) 1.26 from 1.02.

Earnings news this week is quiet on both sides of the border

Economic focus this week is on the Federal Reserve on Wednesday and monthly inflation reports on Tuesday and Wednesday.

The U.S. Dollar Index rolled over from intermediate overbought levels

Medium term technical indicators in the U.S. (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) remained at or near overbought levels last week but moved higher

Medium term technical indicators in Canada remained in upward trends last week and intermediate overbought, but show early signs of rolling over

Short term technical indicators for U.S. and Canadian equity markets, commodities and most sectors (20 day moving averages, short term momentum) generally moved higher last week, but remain overbought levels

The outlook for S&P 500 earnings and sales remains positive: According to FactSet, 99% of companies have reported first quarter results. One company is scheduled to report this week. To date, 77% beat consensus earnings estimates and 77% beat consensus sales estimates. Earnings and sales estimates rose slightly again last week. Second quarter 2018 earnings are expected to increase 19.0% on an 8.7% increase in sales. Third quarter earnings are expected to increase 21.2% on a 7.6% increase in sales. Fourth quarter earnings are expected to increase 17.0% on a 5.8% increase in sales. For all of 2018, earnings are expected to increase 19.7% (up from 19.6% last week) on a 7.6% increase in sales.

Short term political concerns remained elevated last week. Steel and aluminum tariffs imposed by the U.S. and retaliated by participating nations ramped up tensions. NAFTA negotiations now appear virtually dead until after the Mexican election on July 1st and the U.S. mid-term election in November. Other issues include North Korean negotiations, rising trade war fears (particularly against China), impact of revocation of the Iran nuclear weapons agreement and increased scrutiny by special council on Russia's influence on the Presidential election. In addition, U.S. mid-term election political rhetoric normally starts to ramp up in June culminating in October.

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for June 8th 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

The S&P 500 Index gained 44.41 points (1.62%) last week. Intermediate trend remains down. The Index remained above its 20 day moving average. Short term momentum indicators turned back up last week.

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 72.60 from 61.20. Percent remains intermediate overbought.

Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 64.40 from 58.40. Percent returned to intermediate overbought from neutral.

Bullish Percent Index for S&P 500 stocks increased last week to 61.40 from 58.20 and remained above its 20 day moving average. The Index changed from Neutral to Overbought.

Bullish Percent Index for TSX stocks increased last week to 63.16 from 62.90 and remained above its 20 day moving average. The Index remains intermediate overbought.

TSX Composite Index added 159.15 points (0.99%) last week. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index remains Negative (Score: -2). The Index remained above its 20 day moving average (Score: 1. Short term momentum indicators turned back up (Score: 1). Technical score increased last week to 2 from 0.

Percent of TSX stocks trading above their 50 day moving averages slipped last week to 69.58 from 70.42. Percent remains intermediate overbought and showing signs of rolling over.

Percent of TSX stocks trading above their 200 day moving average increased last week to 58.33 from 54.17. Percent remains intermediate neutral.

Dow Jones Industrial Average gained 681.32 points (2.77%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed last week to Neutral from Negative. The Average remained above its 20 day moving average. Short term momentum indicators have turned up. Technical score changed last week to 0 from -4.

Bullish Percent Index for Dow Jones Industrial stocks was unchanged last week at 66.67 and remained above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for NASDAQ Composite stocks increased last week to 63.14 from 61.77 and remained above its 20 day moving average. The Index remains intermediate overbought.

NASDAQ Composite Index gained 91.18 points (1.21%) last week. Intermediate uptrend was confirmed last week when the Index moved above 7637.27 to an all-time high. 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.

Russell 2000 Index gained another 24.51 points (1.49%) 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.

Dow Jones Transportation Average gained 44.50 points (0.41%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed last week to Neutral. The Average remained above its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 0 from 2.

Australia All Ordinaries Composite Index added 52.80 points (0.87%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Negative. The Index moved back above its 20 day moving average Short term momentum indicators turned up. Technical score increased last week to 0 from -4.

Nikkei Average gained 523.15 points (2.36%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Negative. The Average moved above its 20 day moving average. Short term momentum indicators turned up. Technical score increased last week to 0 from -4.

Europe iShares added $0.19 (0.41%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. Units remained below their 20 day moving average. Short term momentum indicators turned up. Technical score increased last week to -4 from -6.

Shanghai Composite Index added 34.36 points (1.12%) 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 have turned up. Technical score increased last week to 0 from -2.

Currencies

U.S. Dollar Index dropped 0.63 (0.67%) last week. Intermediate trend remains up. The Index dropped below its 20 day moving average. Short term momentum indicators have turned down.

The Euro added 1.11 (0.95%) last week. Intermediate trend remains down. The Euro moved above its 20 day moving average. Short term momentum indicators have turned up.

Canadian Dollar added U.S. 0.15 (0.19%) to last week. Intermediate trend remains down. The Canadian Dollar remains below its 20 day moving average. Short term momentum indicators are trending down.

The Japanese Yen was unchanged last week. Intermediate trend remains up. The Yen trades above its 20 day moving average. Short term momentum indicators are mixed.

British Pound added 0.56 (0.42%) last week. Intermediate trend remains down. The Pound remains below its 20 day moving average. Short term momentum indicators have turned up.

Commodities and Related ETFs

Daily Seasonal/Technical Commodities Trends for June 8th 2018

Green: Increase from previous day

Red: Decrease from previous day

The CRB Index dropped 1.67 points (0.83%) last week. Intermediate trend changed to neutral from up. Strength relative to the S&P 500 Index remains Negative. The Index remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from -2.

Gasoline dropped $2.00 per gallon (0.93%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. Gas remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -2.

Crude Oil slipped $0.07 per barrel (0.11%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. Crude remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -2.

Natural Gas dropped $0.07 per MBtu (2.36%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. "Natty" closed at its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 1 from 4.

S&P Energy Index added 3.65 points (0.65%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Negative. The Index moved above its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 2 from -2.

Philadelphia Oil Services Index added 2.19 points (1.41%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. The Index remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -2.

Gold added $3.40 per ounce (0.26%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 remains Negative. Gold moved back above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last 0 from -2.

Silver added $0.30 per ounce (1.82%) last week. Intermediate trend changed to up from neutral on a move above $16.86. Strength relative to the S&P 500 Index changed to Negative from Neutral. Silver moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.

AMEX Gold Bug Index slipped $0.32 (0.18%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Index remains below its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to -2 from 2.

Platinum dropped $1.00 per ounce (0.11%) last week. Trend remains down. Relative strength turned Negative. PLAT moved back above its 20 day MA on Friday. Momentum: Up.

Palladium added $9.10 per ounce (0.91%) last week. Trend remains down. Relative strength remains neutral. PALL remains above its 20 day MA. Momentum remains up.

Copper jumped 20.1 cents per lb. (6.49%) last week in anticipation of labour strikes in Chile. Intermediate trend changed to up from down. Strength relative to the S&P 500 Index changed to Positive from Neutral. Copper remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 0.

BMO Base Metals ETF added $0.08 (2.40%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Positive from Negative. Units moved back above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from -4.

Lumber dropped $4.00 (0.67%) last week. Trend remains up. Relative strength remains Neutral. Lumber remained below its 20 day moving average. Momentum indicators are trending down

Grain ETN dropped $0.95 (3.52%) last week. Trend remains up. Relative strength changed to Negative from Neutral. Units remain below their 20 day MA. Momentum remains down.

Agriculture ETF added $1.10 (1.75%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. Units moved back above their 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 2 from -2.

Interest Rates

Yield on 10 year Treasuries gained 4.2 basis points (1.45%) last week. Intermediate trend remains up. Yield remains below its 20 day moving average. Short term momentum indicators have turned back up.

Price of the long term Treasuries ETF dropped $1.77(0.64%) last week. Intermediate trend remains up. Units remain above their 20 day moving average. Short term momentum indicators are trending down.

Volatility

The VIX Index dropped another 1.33 (9.85%) last week. The Index remains below its 20 day moving average. Short term momentum indicators are trending down.

Sectors

Daily Seasonal/Technical Sector Trends for June 8th 2018

Green: Increase from previous day

Red: Decrease from previous day

StockTwits Release on Friday @EquityClock

Technical action by S&P 500 stocks to 10:00: Bullish. Intermediate breakouts: $PHM $MMC $ZTS $ROP.

Editor's Note: After 10:00, breakouts included DHI, ESRX, HRB, MAS, DLR, REG, WLTW and TRV. Breakdowns: QRVO and NRG

Methanex $MX.CA $MEOH moved above $91.38 Cdn to an all-time high extending an intermediate uptrend.

Brookfield Asset Management $BAM $BAM.A.CA moved above U.S. $65.58 extending an intermediate uptrend.

Cogeco Cable $CCA.CA moved below $65.58 extending an intermediate downtrend.

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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