Tech Talk for Monday March 18th 2024
U.S. equity index futures moved higher this morning. S&P 500 futures were up 41 points at 8:30 AM EDT.
Apple gained $0.86 to $173.48 and Alphabet advanced $7.76 to $149.93 after announcing a possible joint venture with Alphabet to include Artificial Intelligence in its next iPhone.
![clip_image002[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2024/03/clip_image0025-4.png "clip_image002[5]")
Tesla added $5.27 to $108.84 after announcing a price increase in the United States for its Model Y vehicle.
The Bottom Line
Focus this week is on the Fed Fund Rate update released at 2:00 PM EDT on Wednesday. U.S. equity markets traded in a narrow range last week prior to the news. Consensus is that the FOMC will maintain the rate at 5.25%-5.50%. Comments following the 2:00 PM statement will be examined carefully to assess when the Rate will move lower. The "hotter than expected" February Consumer Price Index and the February Producer Price Index released last week hinted that a reduction in the Rate will not happen anytime soon. Indeed, both indices appeared to have passed an intermediate low point on the charts and are vulnerable to resuming an intermediate uptrend. Note that recent increases in commodity prices last week will begin to register in March CPI and PPI when next announced in mid-April.
Industrial commodities and related ETFs/shares significantly outperformed North American equity markets last week. Industrial commodity ETN (Symbol: GSG) advanced 3% led by strength in base metal and crude oil prices. 'Tis the season for GSG to move higher between mid-March and early June!
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.FactSet.com
Analysts slightly reduced estimates for the first quarter of 2024. Consensus on a year-over-year basis calls for an earnings increase of 3.3% (versus a 3.4% increase last week). Revenues are expected to increase 3.5%.
Earnings gains accelerate thereafter to the end of 2024. Consensus for the second quarter calls for a 9.1% earnings increase (versus a 9.0% increase last week) and a 4.6% increase in revenues. Consensus for the third quarter calls for an 8.3% increase in earnings (versus a previous 8.2% increase) and a 5.1% increase in revenues. Consensus for the fourth quarter calls for a 17.3% increase in earnings (versus a previous 17.2% increase) and a 5.8% increase in revenues (versus previous 5.7% increase). For all of 2024, consensus calls for an 11.0% increase in earnings and a 5.0% increase in revenues.
Preliminary estimates were offered for fiscal 2025. Consensus calls for a 13.2% earnings increase and a 5.9% revenue increase (versus previous 5.8% increase).
Economic News This Week
Source: www.Investing.com
February U.S. Housing Starts released at 8:30 AM EDT on Tuesday are expected to increase to 1.420 million units from 1.331 million units in January.
Canadian February Consumer Price Index is released at 8:30 AM EDT
FOMC Decision on the Fed Fund Rate is released at 2:00 PM EDT on Wednesday. Consensus calls for no change from the current 5.25%-5.50% rate. Press conference is offered at 2:30 PM EDT
Bank of England's Bank Rate decision released at 8:00 AM EDT on Thursday is expected to remain unchanged at 5.25%.
March Philly Fed is released at 8:30 AM EDT on Thursday
February Exiting Home Sales released at 10:00 AM EDT on Thursday are expected to slip to 3.94 million units from 4.00 million units in January
February Leading Economic Indicators are released at 10:00 AM EDT on Thursday
January Canadian Retail Sales are released at 8:30 AM EDT on Friday.
Selected Earnings News This Week
Source: www.Investing.com
Trader's Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for March 15th 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 March 15th 2024
Green: Increase from previous day
Red: Decrease from previous day
Sectors Daily Seasonal/Technical Sector Trends for March 15th 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
Tech Talk's intermediate outlook for equity markets
Don Vialoux was a guest on "Wolf on Bay Street" released at 7:00 PM EDT on Corus Radio 640 on Saturday. The interview was completed on Thursday. Following are notes developed for the interview:
A word of caution on North American equity markets: They are overbought based on a wide variety of technical and economic indicators:
- Percent of S&P 500 and TSX Composite Index trading above their 50 and 200 day moving average are above 70%.
- Valuation of the S&P 500 Index is elevated above historic levels. The Index is trading at a Price/Earnings multiple above 21 times its 2024 earnings estimate versus the long term average multiple at 15 times.
- The Federal Reserve and Bank of Canada remain concerned about high inflation rates and are unlikely to lower administered interest rates "any time soon." Their actions have hampered prospects for economic growth until at least late this year. More comments on interest rates are scheduled to be released by the Federal Reserve next Wednesday.
Better to look outside of North America for equity market gains into late this year. Equity markets outside of North America are trading at much lower price/earnings multiples. In addition upside potential is not limited by tightening monetary policy by the Federal Reserve and Bank of Canada. Equity markets outside of North America are poised to move higher into the second half of 2024 prompted by rising economic growth.
Far East equity markets particularly have more potential than North American equity markets into this fall. Far East economies experiencing accelerated economic growth this year include Japan, South Korea, Taiwan, Indonesia and India. In addition, the Chinese economy finally is showing early signs of recovery from a recession.
Technical action for Far East country Exchange Traded Funds has been encouraging recently: During the past week, China big cap iShares (Symbol: FXI) completed a reverse Head & Shoulders pattern, India iShares (Symbol: INDA) broke to an all-time high, South Korea iShares (Symbol: EWY) broke to a two year high and Taiwan iShares (Symbol: EWT) broke to a two year high. Equivalent Exchange Traded Funds in Canadian Dollars recorded similar gains.
Investors can take advantage of the recovery in Asia by owning Exchange Traded Funds representing Asia (e.g. Asia iShares: AIA) as well as Exchange Traded Funds available for each of the Far East countries.
An indirect way for Canadian investors to benefit from Far East economic growth is to own commodities and commodity stocks that will benefit from rising demand from the Far East. Examples include base metal Exchange Traded Funds (e.g. XBM.TO in Canadian Dollars and PICK in U.S. Dollars), forest product Exchange Traded Funds (e.g. CUT and WOOD) and fertilizer stocks such as Nutrient (NTR.TO).
Links offered by valued providers
Michael Campbell's Money Talks for March 16th
Michael Campbell's MoneyTalks - Complete Show (mikesmoneytalks.ca)
Spot The Warning Signs of Bankruptcy! David Keller
Spot The Warning Signs of Bankruptcy! - YouTube
Chart Master: Where does Nvidia go from here? Carter Worth
Chart Master: Where does Nvidia go from here? - YouTube
No Fear For Investors? Why The Stock Market Is Near Record Highs with Investopedia’s Caleb Silver (Note comment on energy, copper, gold and gold stocks)
https://www.youtube.com/watch?v=LKarAgQqm28
What’s the Downside Risk for QQQ? David Keller
What’s the Downside Risk for QQQ? | The Mindful Investor | StockCharts.com
How To Profit From Bullish Gap-Down Reversals: Mary Ellen McGonagle
How To Profit From Bullish Gap-Down Reversals | The MEM Edge | StockCharts.com
Risk-Off Signals Possible Downside Ahead: Mary Ellen McGonagle
Risk-Off Signals Possible Downside Ahead - YouTube
Oil & Gas Equipment & Services ETF Resumes its Uptrend: Arthur Hill
Oil & Gas Equipment & Services ETF Resumes its Uptrend | Art’s Charts | StockCharts.com
Decisive Long-Term Breakout for Gold: Carl Swenlin
(Tech Talk tip: Note chart and comment on Brent crude oil).
Decisive Long-Term Breakout for Gold | DecisionPoint | StockCharts.com
Signs in the US and Canadian Economies: Bob Hoye
Signs in the US and Canadian Economies - HoweStreet
Cannabis, Gold, Bitcoin, US Dollar: Mark Leibovit
Cannabis, Gold, Bitcoin, US Dollar - HoweStreet
Trading Desk Notes For March 16, 2024: Victor Adair
Trading Desk Notes For March 16, 2024 - HoweStreet
CMR Interviews: Peter Brandt On Mastering Long-Term Trading Success
CMR Interviews: Peter Brandt On Mastering Long-Term Trading Success - YouTube
Technical Scoop from David Chapman and www.EnrichedInvesting.com
Technical Notes on Friday
Global X Copper Miners $COPX, a basket of global copper miner stocks, moved above $41.63 extending an intermediate uptrend.
Oil Services ETF $OIH moved above $320.81 extending an intermediate uptrend.
Adobe $ADBE a NASDAQ 100 stock moved below $528.01 and $498.70 extending an intermediate downtrend. Quarterly results released on Thursday were less than consensus.
Verizon $VZ a Dow Jones Industrial Average stock moved below $39.26 completing a double top pattern.
S&P 500 Momentum Barometers
The intermediate term Barometer dropped 1.60 on Friday and fell 7.20 last week to 70.60. It remains Overbought. Daily trend has started to turn down.
The long term Barometer slipped 0.40 on Friday and dropped 1.60 last week to 78.00. It remains Overbought. Daily trend has started to turn down.
TSX Momentum Barometers
The intermediate term Barometer added 0.44 on Friday, but dropped 1.77 last week to 62.87. It remains Overbought. Daily trend has started to turn down.
The long term Barometer was unchanged on Friday and slipped 1.78 last week to 67.11. It remains Overbought.
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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