Tech Talk for Monday March 12th 2018
U.S. equity index futures were higher this morning. S&P 500 futures were up 6 points in pre-opening trade.
Adobe gained $2.29 to 233.40 after Stifel Nicolaus raised its target price to $230 from $210.
E Trade added $0.68 to $57.92 after Raymond James upgraded the stock to Strong Buy from Outperform.
Merck added $0.56 to $55.70 after Leerink upgraded the stock to Outperform from Market Perform.
EquityClock's Daily Market Comment
Following is a link:
http://www.equityclock.com/2018/03/09/stock-market-outlook-for-march-12-2018/
Note seasonality charts on Non-farm Payrolls, Average Hourly Earnings, Canada Employment and TSX Composite relative to the S&P 500 Index.
WALL STREET RAW RADIO
WITH FORMER WALL STREET WEEK WITH LOUIS RUKESYER ‘ELF’, MARK LEIBOVIT
SATURDAY, March 10, 2018
GUESTS INCLUDE: Henry Weingarten (Afund.com), Don Vialoux (EquityClock.com), Sinclair Noe (Eatthebankers.com) and Harry Boxer (TheTechTrader.com):
The Bottom Line
World equity markets and economic sensitive sectors entered on schedule their second strongest period of seasonal strength in the year from the beginning of March to the first week in May. (Strongest period is from mid-October to the first week in January). The March to May period is bolstered by encouraging comments offered by CEOs at annual meeting (frequently coinciding with release of first quarter reports) combined by seasonally strong economic news related to the spring buying season (e.g. autos, homes spring clothing). This year the March to May season will be helped by strong gains in corporate sales and earnings triggered by changes in U.S. tax laws.
Now is the time to watch closely for sectors and markets that show positive strength relative to the S&P 500 Index. They are top candidates for purchase for the March-May seasonal trade. Selected commodity sensitive sectors already have surfaced on the radar screen. 'Tis the season" for commodity and commodity equity prices to move higher to at least early May.
Economic news this week
February Consumer Prices to be released at 8:30 AM EST on Tuesday are expected to increase 0.2% versus a gain of 0.5% in January. Excluding food and energy, February Consumer Prices are expected to increase 0.2% versus a gain of 0.3% in January.
February Producer Prices to be released at 8:30 AM EST on Wednesday are expected to increase 0.2% versus a gain of 0.4% in January. Excluding food and energy February Producer Prices are expected to increase 0.2% versus a gain of 0.4% in January.
February Retail Sales to be released at 8:30 AM EST on Wednesday are expected to increase 0.3% versus a decline of 0.3% in January. Excluding auto sales, February Retail Sales are expected to increase 0.3% versus a decline of 0.2% in January.
Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to slip to 230,000 from 231,000 last week.
March Philly Fed Index to be released at 8:30 AM EST on Thursday is expected to slip to 23.3 from 25.8 in February.
March Empire State Manufacturers Survey to be released 8:30 AM EST on Thursday is expected to increase to 14.6 from 13.1 in February.
February Housing Starts to be released at 8:30 AM EST on Friday are expected to slip to 1.264 million units from 1.326 million units in January.
February Industrial Production to be released at 9:15 AM EST on Friday is expected to increase 0.3% versus a decline of 0.1% in January. February Capacity Utilization is expected to increase to 77.7% from 77.5% in January.
March Consumer Sentiment to be released at 10:00 AM EST on Friday is expected to slip to 98.5 from 99.7 in February.
Earning News This Week
Observations
Technical action by individual S&P 500 stocks turned bullish last week. Number of stocks breaking resistance totaled 53 while number of stocks breaking support totaled 10. Breakouts were concentrated in the Technology and Financials sectors. The Up/Down ratio increased last week to (220/202=) 1.09 from 0.86
U.S. economic news this week will focus on the CPI, PPI and Retail Sales
Fourth quarter earnings reports by S&P 500 companies have passed their peak with 99% reported to date. According to FactSet, 73% reported higher than consensus earnings and 77% reported higher than consensus revenues. The remaining five companies are scheduled to report this week.
Medium term technical indicators in the U.S. (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) moved higher last week to Neutral levels. Medium term technical indicators in Canada also moved higher but remain at intermediate oversold levels.
Short term technical indicators for U.S. and Canadian equity markets and most sectors (20 day moving averages, short term momentum) moved sharply higher last week.
Seasonal influences are working well this spring. Seasonal influences on a wide variety of U.S. and Canadian equity indices and economic sensitive sectors tend to show renewed strength starting near the beginning of March. See charts below.
The outlook for S&P 500 earnings and sales remains positive: According to FactSet, fourth quarter adjusted earnings (excluding one-time write downs related to the tax bill) increased 14.8% on an 8.2% increase in sales. Estimates for 2018 were virtually unchanged last week. First quarter 2018 earnings are expected to increase 17.0% on a 7.2% increase in sales. Second quarter 2018 earnings are expected to increase 18.9% on a 7.5% increase in sales. Third quarter earnings are expected to increase 20.7% on a 6.2% increase in sales. Fourth quarter 2018 earnings are expected to increase 16.8% on a 5.4% increase in revenues. For all of 2018, earnings are expected to increase 18.4% (up from 18.3% last week) on a 6.6% increase in sales..
Short term political uncertainties remain, including struggling NAFTA negotiations, rising trade war fears following proposed tariffs on aluminum and steel and increased scrutiny by special council on Russia's influence on the Presidential election
Earnings and revenue prospects beyond the fourth quarter report season 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 6.8% from foreign currency translation alone following the current 13.5% 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 March 9th 2018
Green: Increase from previous day
Red: Decrease from previous day
Calculating Technical Scores
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 95.32 points (3.54%) last week. Intermediate trend remains down. The Index moved above its 20 day moving average last week. Short term momentum indicators are trending up.
Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 56.00 from 33.20. Percent has returned to intermediate neutral from intermediate oversold.
Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 70.20 from 63.40. Percent remains intermediate overbought.
Bullish Percent Index for S&P 500 stocks increased last week to 59.40 from 55.60 and moved above its 20 day moving average. The Index is intermediate neutral.
Bullish Percent Index for TSX stocks increased last week to 58.40 from 57.60, but remained below its 20 day moving average. The Index remains intermediate neutral.
TSX Composite Index gained 193.22 points (1.26%) last week. Intermediate trend remains down (Score -2). Strength relative to the S&P 500 changed to Negative from Neutral (Score: -2). The Index remains above its 20 day moving average (Score: 1). Short term momentum indicators have turned up (Score: 1). Technical score remained last week at -2.
Percent of TSX stocks trading above their 50 day moving average increased last week to 36.73 from 28.46. Despite gains, Percent remains intermediate oversold.
Percent of TSX stocks trading above their 200 day moving average increase last week to 46.71 from 43.09. Percent has advanced to intermediate neutral.
Dow Jones Industrial Average gained 797.68 points (3.25%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remained Negative. The Average moved above its 20 day moving average. Short term momentum indicators have turned up. Technical score increase last week to 0 from -4.
Bullish Percent Index for Dow Jones Industrial stocks slipped last week to 56.67 from 60.00 and dropped below its 20 day moving average. The Index changed to intermediate neutral from intermediate overbought.
Bullish Percent Index for NASDAQ Composite stocks increased last week to 61.09 from 67.16 and moved above its 20 day moving average. The Index has become intermediate overbought from intermediate neutral.
NASDAQ Composite Index gained 302.94 points (4.17%) last week. Intermediate trend changed on Friday to up from down on a move above 7505.77 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 turned up. Technical score increased last week to 6 from 0
Russell 2000 Index gained 63.97 points (4.17%) 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 turned up. Technical score increased last week to 2 from 0.
Dow Jones Transportation Average gained 406.93 points (4.17%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed to Neutral from Negative. The Average moved back above its 20 day moving average. Short term momentum indicators turned back up. Technical score increased last week to 2 from -4.
Australia All Ordinaries Composite Index gained 40.70 points (0.68%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Index moved back above its 20 day moving average. Short term momentum indicators continue to trend down. Technical score remained last week at -2.
Nikkei Average gained 287.56 points (1.36%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Negative. The Average remained below its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to -2 from -4.
Europe iShares added $1.00 (2.16%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. Units moved above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to -2 from -6.
Shanghai Composite Index added 52.64 points (1.62%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to -2 from -4.
Emerging Markets iShares added $1.62 (3.37%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Neutral. Units moved above their 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 4 from -2/
Currencies
The U.S. Dollar Index gained 0.16 (0.18%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators have turned down.
The Euro slipped 0.22 (0.18%) last week. Intermediate trend remains down. The Euro dropped below its 20 day moving average. Short term momentum indicators are mixed.
The Canadian Dollar added 0.47 (0.61%) last week. Intermediate trend remains down. The Canuck Buck remains below its 20 day moving average. Short term momentum indicators have turned up.
The Japanese Yen slipped 0.96 (1.02%) last week. Intermediate trend remains up. The Yen remains above its 20 day moving average. Short term momentum indicators have turned down.
The British Pound added 0.58 (0.42%) last week. Intermediate trend remains up. The Pound remained below its 20 day moving average. Short term momentum indicators are mixed.
Commodities and Related ETFs
Daily Seasonal/Technical Commodities Trends for March 9th 2018
Green: Increase from previous day
Red: Decrease from previous day
* Excludes adjustment from rollover of futures contracts
The CRB Index added 1.00 (0.52%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Index moved above its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at 2.
Gasoline was unchanged last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. Gas closed at its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 1 from 4.
Crude Oil added $0.79 per barrel (1.29%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. Crude moved back above its 20 day moving average on Friday. Short term momentum indicators are trending down. Technical score increased last week to 2 from 0.
Natural Gas added $0.04 per MBtu (1.49%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index turned Positive from Neutral. "Natty" remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.
S&P Energy Index gained 10.32 points (2.10%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. The Index moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increased last week to -2 from -4.
Philadelphia Oil Service Index gained 3.72 points (2.75%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains negative. The Index moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.
Gold added $0.60 per ounce (0.05%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Negative from Neutral. Gold remains below its 20 day moving average. Short term momentum indicators have turned up. Technical score remained last week at -4.
Silver added $0.04 per once (2.43%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. Silver moved above its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 2 from 0.
AMEX Gold Bug Index slipped $0.07 (0.41%) 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 higher. Technical score improved last week to -4 from -6.
Platinum eased $0.90 per ounce (0.09%) last week. Trend remains down. Relative strength turned Negative. PLAT remains below its 20 day MA. Momentum remains down.
Palladium added $0.20 per ounce (0.02%) last week. Trend remains Neutral. Relative strength remains Negative. PALL remains below its 20 day MA. Momentum remains down.
Copper added 1.5 cents per lb. (0.48%) last week. Intermediate trend remains Neutral. Strength relative to the S&P 500 Index changed to Negative from Neutral. Copper remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from -2.
BMO Base Metals ETF added $0.16 (1.33%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Neutral. Units closed at their 20 day moving average on Friday. Short term momentum indicators are trending down. Technical score slipped last week to -1 from 0.
Lumber slipped $0.40 (0.08%) last week. Trend remains up. Relative strength changed to Negative from Neutral. Lumber remained below its 20 day MA. Momentum: down
Grain ETN dropped $0.37 (1.30%) last week. Trend remains up. Relative strength remains Positive. Units remained above their 20 day MA. Momentum turned down
Agriculture ETF added $2.50 (4.04%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Neutral. The Index remains above its 20 day moving average. Short term momentum indicators turned up. Technical score increased last week to 4.from 2
Interest Rates
Yield on 10 year Treasuries increased 3.7 basis points (1.30%) last week. Yield remained above its 20 day moving average. Short term momentum indicators have turned up.
Price of the long term Treasury ETF dropped 0.44 (0.37%) last week. Intermediate trend remains down. Price dropped below its 20 day moving average.
Volatility
The VIX Index dropped 5.00 (25.46%) last week. It dropped below its 20 day moving average.
Sectors
Daily Seasonal/Technical Sector Trends for March 9th 2018
Green: Increase from previous day
Red: Decrease from previous day
StockTwits Released on Friday
Technical action by S&P 500 stocks to 10:00: Bullish. Breakouts: $STZ, $EQR $ETFC $SCHW $CTXS $LRCX $NTAP $TSS $IDXX $PLD $UDR. Breakdown: $HAS
Editor's Note: After 10:00 AM EST, another 20 S&P 500 stocks broke resistance in response to a bullish February Employment report. No stocks broke support.
Information Technology SPDRs $XLK moved above $69.71 to an all-time high extending an intermediate uptrend.
U.S. bank stocks are leading the rally $KBE moved above $51.58 to an all-time high extending an intermediate uptrend.
iShares Global Timber ETF $WOOD moved above $77.89 to an all-time high extending an intermediate uptrend.
Canada employment higher by 0.2% in February, around half of average increase for month. #CDNecon #CAD $MACRO
Non-farm payrolls increased by 0.8% in February, matching the highest percent change for the month in over 50 years. #NFP #Economy $MACRO
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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