Tech Talk for Monday March 26th 2018
U.S. equity index futures were higher this morning. S&P 500 futures were up 39 points in pre-opening trade. Futures moved higher on news that the U.S. Administration has been negotiating terms for trade with China prior to imposing tariffs.
USG jumped $7.04 to $40.55 after Berkshire Hathaway offered its 31% stake in the company to Knauf Entities for $42 per share.
Marathon Oil added $7.04 to $40.55 after JP Morgan raised its rating to Overweight from Neutral.
Dollar Tree gained $2.55 to $94.50 after Piper Jaffray upgraded the stock to Overweight from Neutral.
Altria added $1.06 to $60.33 after Deutsche Bank initiated coverage with a Buy rating.
Jon Vialoux's EquityClock Daily Market Comment
Following is a link:
http://www.equityclock.com/2018/03/23/stock-market-outlook-for-march-26-2018/
Note seasonality charts on New Home Sales, Durable Goods Orders, Canadian Consumer Price Index, Canadian Dollar and Canadian Retail Sales.
WALL STREET RAW RADIO
WITH HOST MARK LEIBOVIT – SATURDAY, MARCH 24, 2018
GUESTS INCLUDE: DON VIALOUX, HARRY BOXER, HENRY WEINGARTEN, SINCLAIR NOE AND WAYNE ALLEN ROOT
The Bottom Line
OOOPs, that was not expected to happen! World equity market tumbled last week on trade war fears. Normally, 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 was expected to be helped by strong gains in corporate sales and earnings triggered by changes in U.S. tax laws. However, trade war fears overwhelmed encouraging fundamentals. Technical pressures were most prominent in late trading on Friday. Equity markets already have reached intermediate oversold levels, but have yet to show signs of bottoming. A test of lows set on February 9th by major North American equity indices appears imminent. Those lows are 2,532.69 for the S&P 500 Index, 23,369.29 for the Dow Jones Industrial Average and 14,785.78 for the TSX Composite Index.
Despite general equity market weakness, selected outperforming sectors continue to show promise: The CRB Index continues to move higher thanks partially to weakness in the U.S. Dollar Index. Energy and precious metal prices and related equity prices recorded positive technical action late last week.. 'Tis the season" for commodity and commodity equity prices to move higher to at least early May!
Prospects beyond the end of April become increasingly murky. Negative political influences on North American equity markets during a U.S. mid-term election year are strongest between May and October.
Economic News This Week
March Consumer Confidence Index to be released at 10:00 AM EDT on Tuesday is expected to increase to 131.0 from 130.8.
Quebec budget is released on Tuesday
Third estimate of Annualized Fourth Quarter U.S. Real GDP to be released at 8:30 AM EDT on Wednesday is expected to show an increase to 2.7% from 2.5%
Ontario budget is released on Wednesday
Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to dip to 228,000 from 229,000.
February Personal Income to be released at 8:30 AM EDT on Thursday is expected to increase 0.4% versus a gain of 0.4% in January. February Personal Spending is expected to increase 0.2% versus a gain of 0.2% in January
Canadian January Real GDP to be released at 8:30 AM EDT on Thursday is expected to increase 0.1% versus a gain of 0.1% in December.
March Chicago PMI to be released at 9:45 AM EDT on Thursday is expected to increase to 63.2 from 61.9.
March Consumer Sentiment to be released at 10:00 AM EDT on Thursday is expected to increase 0.1% versus a gain of 0.1% in February.
Earnings News This Week
Observations
Technical action by individual S&P 500 stocks turned bearish last week. Number of stocks breaking resistance totaled 10 while number of stocks breaking support totaled 108. Half of the breakdowns occurred in the last two hours of trading on Friday. The Up/Down ratio plunged last week to (197/245=) 0.80 from 1.29
Economic news this week will focus on GDP reports for the U.S. and Canada.
Medium term technical indicators in the U.S. (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) dropped last week to Oversold from Neutral levels, but have yet to show signs of bottoming.
Medium term technical indicators in Canada also moved lower last week to Oversold from Neutral.
Short term technical indicators for U.S. and Canadian equity markets, commodities and most sectors (20 day moving averages, short term momentum) generally moved lower last week. A notable exception was the energy and gold sectors.
Seasonal influences did not work well last week. Seasonal influences on a wide variety of U.S. and Canadian equity indices and economic sensitive sectors tend to show strength starting near the beginning of March and continuing to early May. See charts below.
The outlook for S&P 500 earnings and sales remains positive: According to FactSet, estimates for 2018 were slightly higher last week. First quarter 2018 earnings are expected to increase 17.2% on a 7.2% increase in sales. Thirteen companies have reported to date (including 11 companies that reported higher than consensus earnings) and six more companies are scheduled to report this week. Second quarter 2018 earnings are expected to increase 19.1% on a 7.6% increase in sales. Third quarter earnings are expected to increase 20.8% on a 6.3% increase in sales. Fourth quarter 2018 earnings are expected to increase 17.0% on a 5.5% increase in revenues. For all of 2018, earnings are expected to increase 18.4% on a 6.6% increase in sales.
Short term political uncertainties remain, including struggling NAFTA negotiations, rising trade war fears (particularly against China) and increased scrutiny by special council on Russia's influence on the Presidential election
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 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 7.1% from foreign currency translation alone following the current 14.3% 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.
Watch out for quarter end "window dressing" this week when portfolio managers liquidate losing positions prior to release of their first quarter report.
Friday is a holiday for most equity markets.
Equity Indices and related ETFs
Daily Seasonal/Technical Equity Trends for March 23rd 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 plunged 163.75 points (5.95%) last week. Intermediate trend remains down. The Index remains below its 20 day moving average. Short term momentum indicators are trending down.
Percent of S&P 500 stocks trading above their 50 day moving average plunged last week to 15.60 from 51.20. Percent changed to deeply oversold from intermediate neutral, but has yet to show signs of bottoming.
Percent of S&P 500 stocks trading above their 200 day moving average plunged last week to 51.00 from 68.20. Percent has dropped to intermediate neutral from intermediate overbought, but has yet to show signs of bottoming.
Bullish Percent Index for S&P 500 stocks plunged last week to 44.60 from 61.60 and dropped below its 20 day moving average. The Index changed to intermediate neutral from intermediate overbought, but has yet to show signs of bottoming.
Bullish Percent Index dropped last week to 56.00 from 58.80 and moved below its 20 day moving average. The Index remains intermediate neutral.
TSX Composite Index dropped 487.59 points (3.10%) last week. Intermediate trend changed on Friday to neutral from up on a move below 15,286.55 (Score: 0). Strength relative to the S&P 500 Index changed to Positive from Neutral (Score: 2). The Index dropped below its 20 day moving average (Score: -1). Short term momentum indicators are trending down (Score: -1). Technical score dropped last week to 0 from 4.
Percent of TSX stocks trading above their 50 day moving average dropped last week to 34.84 from 41.39. Percent has dropped to intermediate oversold from intermediate neutral, but has yet to show signs of bottoming.
Percent of TSX stocks trading above their 200 day moving average dropped last week to 43.03 from 47.13. Percent remains intermediate neutral.
Dow Jones Industrial Average plunged 1,413.31 points (5.67%) last week. Intermediate trend remained neutral. Strength relative to the S&P 500 Index remains Negative. The Average remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from -2.
Bullish Percent Index for Dow Jones Industrial stocks plunged last week to 36.67 from 63.33 and dropped below its 20 day moving average. The Index changed to intermediate oversold from intermediate overbought.
Bullish Percent Index for NASDAQ Composite stocks dropped last week to 58.74 from 62.83 and dropped below its 20 day moving average. The Index remains intermediate overbought and trending down.
NASDAQ Composite Index dropped 489.32 points (6.54%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed on Friday to Neutral from Positive. The Index dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 4.
Russell 2000 Index dropped 75.97 points (3.70%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. The Index dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 0.
Dow Jones Transportation Average dropped 520.50 points (4.87%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Positive. The Average dropped below its 20 day moving average. Short term momentum indicators are turned down. Technical score dropped last week to 0 from 4.
Australia All Ordinaries Composite Index dropped 125.90 points (2.08%) last week. Intermediate trend remained neutral. Strength relative to the S&P 500 Index changed last week to Positive from Negative. The Index remained below its 20 day moving average. Short term momentum indicators turned down on Friday. Technical score dropped last week to 0 from 4.
Nikkei Average plunged 1,058.65 points (4.88%) last week. Intermediate trend changed to down from neutral on a move below 20,917 on Friday. Strength relative to the S&P 500 Index changed to Positive from Negative. The Average dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score increased last week to 0 from -2.
Europe iShares dropped $1.68 (3.56%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Positive from Negative. Units moved below their 20 day moving average. Short term momentum indicators turned down. Technical score remained last week at -2
Shanghai Composite Index dropped 84.12 points (3.58%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Positive from Negative. The Index moved below its 20 day moving average. Short term momentum indicators are trending down. Technical score increased last week to -2 from -4.
Emerging Markets iShares dropped $2.32 (4.71%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Positive from Neutral. Units moved below their 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to 2 from 4.
Currencies
The U.S. Dollar Index dropped 0.87 (0.86%) last week. Intermediate trend remains neutral. The Index remained below its 20 day moving average Short term momentum indicators are trending down.
The Euro added 0.64 (0.52%) last week. Intermediate trend remains down. The Euro moved above its 20 day moving average. Short term momentum indicators are trending down.
The Canadian Dollar added 1.15 (1.51%) last week. Intermediate trend remains down. The Canuck Buck moved above its 20 day moving average on Friday. Short term momentum indicators are trending up.
The Japanese Yen gained 1.19 (1.26%) last week. Intermediate trend remains up. The Yen remains above its 20 day moving average. Short term momentum indicators are trending up.
British Pound gained 1.94 (1.39%) last week. Intermediate trend remains up. The Pound remains above its 20 day moving average. Short term momentum indicators are trending up.
Commodities and Related ETFs
Daily Seasonal/Technical Commodities Trends for March 23rd 2018
Green: Increase from previous day
Red: Decrease from previous day
* Excludes adjustment from rollover of futures contracts
CRB Index added 1.90 points (0.92%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed last week to Positive from Neutral. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 0.
Gasoline gained $0.09 per gallon (4.62%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed last week to Positive from Neutral. Gas remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 4.
Crude Oil gained $3.47 per barrel (5.56%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed last week to Positive from Neutral. Crude Oil remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 4.
Natural Gas slipped $0.06 per MBtu (2.23%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remained Neutral. "Natty" remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -4.
S&P Energy Index dropped 4.62 points (0.93%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed last week to Positive from Negative. The Index dropped below its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -2.
Philadelphia Oil Services Index slipped 0.65 points (0.47%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Positive from Negative. The Index dropped below its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.
Gold gained $37.60 per ounce (2.87%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Positive from Negative. Gold moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score changed last week to 2 from -6.
Silver gained $0.31 per ounce (1.91%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Positive from Negative. Silver moved above its 20 day moving average on Friday. Short term momentum indicators turned up. Technical score increased last week to 2 from -2.
AMEX Gold Bug Index added 5.70 points (3.33%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed last week to Positive from Negative. The Index moved above its 20 day moving average on Friday. Short term momentum indicators have turned up. Technical score increased last week to 2 from -2.
Platinum dropped $1.80 per ounce (0.19%) last week. Trend remains down. Relative strength turned Positive. PLAT remains below its 20 day MA. Momentum remains down.
Palladium dropped $17.00 per ounce (1.72%) last week. Trend remains neutral. Relative strength changed to Positive. PALL remains below its 20 day MA. Momentum turned down.
Copper slipped $0.117 per lb. (3.76%) last week. Intermediate trend changed to down from neutral on a move below $3.026 per lb. Strength relative to the S&P 500 Index changed to Neutral from Negative. Copper remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score changed last week to -4 from -2.
BMO Base Metals ETF dropped $1.03 (8.33%) last week. Intermediate trend changed to down from up on Friday on a move below $11.37. Strength relative to the S&P 500 Index remained Neutral. Units remained below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 4.
Lumber dropped $1.50 (0.31%) last week. Trend remains up. Relative strength changed to Positive from Negative. Lumber remains below its 20 day MA. Momentum: up.
Grain ETN dropped $0.59 (2.22%) last week. Trend remains up. Relative strength changed to Neutral from Negative. Units remained below their 20 day MA. Momentum: down.
Agriculture ETF dropped $2.82 (4.50%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Negative. Units remained below their 20 day moving average. Short term momentum indicators are trending down. Technical score increased last week to 0 from -2.
Interest Rates
Yield on 10 year Treasuries slipped 1.8 basis points (0.63%) last week. Intermediate trend remains up. Yield dropped below its 20 day moving average. Short term momentum indicators are trending down.
Price of the long term Treasury ETF added $0.36 (0.30%) last week. Trend remains up. Units remained above their 20 day moving average.
Volatility
The VIX Index jumped 9.12 (57.90%) last week. The Index moved above is 20 day moving average. Short term momentum indicators are trending up.
Daily Seasonal/Technical Sector Trends for March 23rd 2018
Green: Increase from previous day
Red: Decrease from previous day
StockTwits Released on Friday @EquityClock
Technical action by S&P 500 stocks to 10:30: Bearish. No intermediate breakouts. Breakdowns:
$GM $RCL $TSN $BK $CB $ABC $CELG $FBHS $NLSN $ORCL $XRX $TTWO.
Editor's Note: After 10:30, one breakout: APC. Breakdowns: LOW BEN SYF LNC IVZ MTD, JEC EMR JCI EXPD PH EBAY DISCA ROK
More Canadian "gassy" stocks completed double bottom patterns: $ARX.CA $AAV.CA
Anadarko $APC, a U.S. "gassy" stock moved above $62.24 extending an intermediate uptrend.
Canadian gold/silver stocks establishing intermediate uptrends this morning: $GG $K.CA $WPM
Wheaton Precious Metals $WPM $WPM.CA completed a reverse Head & Shoulders pattern on a move above $20.28 U.S.
Canadian National Railway $CNR.CA $CNI, a TSX 60 stock moved below $92.58 Cdn. extending an intermediate downtrend.
Auto ETF $CARZ moved below $40.42 completing a modified Head & Shoulders pattern.
Home Depot $HD, a Dow Jones Industrial stock moved below $174.43 setting an intermediate downtrend
Disney $DIS, a Dow Jones Industrial stock moved below $100.26 extending an intermediate downtrend.
George Weston $WN.CA, a TSX 60 stock moved below $101.61 extending an intermediate downtrend.
Teck Corp $TECK $TECK.CA, a TSX 60 stock moved below $33.23 Cdn completing a double top pattern.
Power Corp $POW.CA, a TSX 60 stock moved below $129.04 extending an intermediate downtrend.
Durable Goods Orders up 12.3% (NSA) in February, above average gain of 7.3%, but still rather tame on year #Economy #Manufacturing $MACRO
New Home Sales continue to struggle in the new year, up 8.5% (NSA) in February, below 13.2% average gain #Housing #Economy $MACRO
Canada Retail Trade coming in 3.9% above average in January, best read since 2014 #CAD $MACRO
Cdn. mortgage interest costs continue a torid pace, up a full 2% in just the past four months. #Housing #CDNecon $STUDY
CPI in Canada off to a fast pace in 2018, up 0.6% in February, above average gain of 0.5% #CDNecon #CAD $MACRO
Pharmaceutical ETF $PPH moved below $55.82 extending an intermediate downtrend.
Materials SPDRs $XLB moved below $56.40 completing a modified Head & Shoulders pattern.
AT &T $T, a Dow Jones Industrial stock moved below $34.65 extending an intermediate downtrend.
S&P 500 Index back testing its 200-day moving average. Difference this time: no bounce! http://www.equityclock.com/2018/03/23/stock-market-outlook-for-march-26-2018/ $SPX $SPY $ES_F
MMM $MMM, a Dow Jones Industrial stock moved below $216.90 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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