Tech Talk for Monday March 5th 2018

U.S. equity index futures were lower this morning. S&P 500 futures were down 8 points in pre-opening trade. Investors are responding partially to no clear decision from Italy's election held yesterday.

TJX added $0.35 to $84.00 after MKM Partners raised its target price to $94 to $87.

XL Group gained $13.25 to $56.55 after receiving a takeover offer from AXA for $57.60 per share. The offer is.valued at $15.3 billion.

Valeant added $0.75 to $15.62 after Deutsche Bank upgraded the stock to Buy from Hold.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/03/02/stock-market-outlook-for-march-5-2018/

Note seasonality charts on Canada's GDP, Canadian Dollar, Canadian Steel Production and Canadian Aluminum Production

WALL STREET RAW RADIO, SATURDAY, MARCH 3, 2018 – WITH HOST MARK LEIBOVIT

GUESTS INCLUDE:  DON VIALOUX (EQUITYCLOCK.COM), HENRY WEINGARTEN (AFUND.COM),  ERIC HADIK (INSIIDETRACK.COM), COLIN CIESZYNSKI (CANADIAN SOCIETY OF TECHNICAL ANALYSTS), AND SINCLAIR NOE (EATTHEBANKERS.COM).

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The Bottom Line

World equity markets and economic sensitive sectors are about to enter 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 Services ISM to be released at 10:00 AM EST is expected to slip to 58.8 from 59.9 in January.

January Factory Orders to be released at 10:00 AM EST on Tuesday are expected to drop 1.2% versus a gain of 1.7% in December

February ADP Employment Report to be released at 8:15 AM EST is expected slip to 203,000 from 234,000 in January

Canadian January Merchandise Deficit to be released at 8:30 AM EST on Wednesday is expected to slip to $2.0 billion from $3.2 billion in December.

Bank of Canada Monetary Review is released at 10:00 AM EST on Wednesday. The Overnight lending rate is expected to remain at 1.25%.

Beige Book is released at 2:00 PM EST on Wednesday.

ECB Monetary Policy Statement is released at 7:45 AM EST on Thursday. Look for fine tuning of forward guidance on asset purchases.

Canadian February Housing Starts to be released at 8:15 AM EST on Thursday are expected to increase to 218,000 from 216,182 in January.

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 220,000 from 210,000 last week.

February Non-Farm Payrolls to be released at 8:30 AM EST on Friday are expected to slip to 195,000 from 200,000 in January. February Unemployment Rate is expected to slip to 4.0% from 4.1% in January. Average Hourly Earnings are expected to increase 0.3% versus a gain of 0.3% in January.

Canadian February Employment to be released at 8:30 AM EST on Friday is expected to post a gain of 20,000 versus a drop of 88,000 in January.

Earnings News This Week

Observations

Technical action by individual S&P 500 stocks remained bearish last week. Number of stocks breaking resistance totaled 19 while number of stocks breaking support totaled 48. The Up/Down ratio decreased last week to (192/222=) 0.86 from 1.02

U.S. economic news this week will focus on the February Employment report on Friday

Canadian economic news this week focuses on the Bank of Canada's monetary policy statement on Wednesday

Fourth quarter earnings reports by S&P 500 companies have passed their peak with 97% reported to date. According to FactSet, 74% reported higher than consensus earnings and 78% reported higher than consensus revenues. Another 32 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 lower last week. Medium term technical indicators in Canada also moved lower an 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 lower last week.

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 7.5% increase in sales. Second quarter 2018 earnings are expected to increase 18.9% on a 7.8% increase in sales. Third quarter earnings are expected to increase 20.6% on a 6.5% increase in sales. Fourth quarter 2018 earnings are expected to increase 16.7% (up from 16.6% last week) on a 5.1% increase in revenues. For all of 2018, earnings are expected to increase 18.3% (up from 18.2%) on a 6.7% increase in sales..

Short term political uncertainties remain, including North Korean "sabre rattling", 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 18.3% 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 2nd 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 dropped 56.05 points (1.03%) last week. Intermediate trend remains down. The Index dropped below its 20 day moving average last week. Short term momentum indicators are trending down.

Percent of S&P 500 stocks trading above their 50 day moving average plunged last week to 33.20 from 51.40. Percent has returned to an intermediate oversold level.

Percent of S&P 500 stocks trading above their 200 day moving average dropped last week to 63.40 from 69.60. Percent remains intermediate overbought.

Bullish Percent Index for S&P 500 stocks dropped last week to 55.60 from 59.80 and dropped below its 20 day moving average.

Bullish Percent Index for TSX stocks dropped last week to 57.60 from 59.60 and remained below its 20 day moving average. Percent remains intermediate overbought and trending down.

TSX Composite Index dropped 253.86 points (1.62%) last week. Intermediate trend remains down (Score: -2). Strength relative to the S&P 500 Index remained Neutral (Score: 0). The Index dropped below its 20 day moving average last week. Short term momentum indicators have turned down. Technical score dropped last week to -4 from 0.

Percent of TSX stocks trading above their 50 day moving average slipped last week to 28.46 from 30.61. Percent remains intermediate oversold.

Percent of TSX stocks trading above their 200 day moving average dropped last week to 43.09 from 45.31. Percent is intermediate slightly oversold.

Dow Jones Industrial Average plunged 771.93 points (3.05%) last week. Intermediate trend remains Neutral. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Average dropped below its 20 day moving average last week. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 2.

Bullish Percent Index for Dow Jones Industrial stocks slipped last week to 60.00 from 63.33, but remained above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for NASDAQ Composite stocks dropped last week to 57.16 from 58.53. The Index remains intermediate overbought.

NASDAQ Composite Index dropped 79.52 points (1.08%) last week. Intermediate trend remained down. Strength relative to the S&P 500 Index remains Positive. The Index remained above its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 0 from 2.

Russell 2000 Index dropped 16.02 points (1.03%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index turned to Positive from Negative. The Index moved back above its 20 day moving average on Friday. Short term momentum indicators are trending down. Technical score changed back on Friday to 0.

Dow Jones Transportation Average dropped 245.92 points (2.32%) last week. Intermediate trend remained last week at Neutral. Strength relative to the S&P 500 Index remained Negative. The Average remained below its 20 day moving average. Short term momentum indicators turned down last week. Technical score dropped last week to -4 from 0.

Australia All Ordinaries Composite Index dropped 76.80 points (1.26%) last week. Intermediate trend remains Neutral. Strength relative to the S&P 500 Index remains Neutral. The Index dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 2.

Nikkei Average dropped 711.14 points (3.25%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index returned to Negative on Friday. The Average remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from -2.

Europe iShares dropped $1.42 (2.97%) last week. Intermediate trend remain down. Strength relative to the S&P 500 Index remains Negative. Units remain below their 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to -6 from -4.

Shanghai Composite Index dropped 34.49 points (1.05%) 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 are trending up. Technical score remained last week at -4.

Emerging Markets iShares dropped $1.59 (3.20%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from -4.

Currencies

U.S. Dollar Index added 0.10 (0.11%) last week despite the 0.42% drop on Friday. Intermediate trend changed to up from down on a move above 90.46. The Index remained above its 20 day moving average. Short term momentum indicators are trending up.

The Euro added 0.34 (0.28%) last week. Intermediate trend changed last week to down from up on a move below 122.06. The Euro moved back above its 20 day moving average on Friday. Short term momentum indicators are trending down, but showing early signs of bottoming.

Canadian Dollar plunged US 1.41 cents (1.79%) last week. Intermediate trend remains neutral. The Canuck Buck remained below its 20 day moving average. Short term momentum indicators are trending down .

Japanese Yen added 1.02 (1.09%) last week. Intermediate trend remains up. The Yen remains above its 20 day moving average. Short term momentum indicators are trending up.

British Pound dropped 1.79 (1.28%) last week. Intermediate trend remains up. The Pound remained below its 20 day moving average. Short term momentum indicators are trending down.

Commodities and Related ETFs

Daily Seasonal/Technical Commodities Trends for March 2nd 2018

Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

The CRB Index dropped 1.87 points (0.95%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Positive last week. The Index remained above its 20 day moving average. Short term momentum indicators turned down. Technical score dropped last week to 2 from 6.

Gasoline dropped $0.09 per gallon (4.52%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Gas remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 4 from 6.

Crude Oil dropped $2.30 per barrel (3.62%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. Crude dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 6.

Natural gas slipped $0.03 per MBtu (1.13%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Negative. "Natty" moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -4.

S&P Energy Index dropped 13.73 points (2.72%) 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 are trending up. Technical score remained last week at -4.

Philadelphia Oil Services Index dropped 5.93 points (4.20%) last week. Intermediate trend remains 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 up. Technical score remained last week at 0.

Gold slipped $6.90 per ounce (0.52%) last week. Intermediate trend changed to down on a move below $1,309.00. Strength relative to the S&P 500 Index remains Neutral. Gold remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 2.

Silver slipped $0.01 per ounce (0.07%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Neutral. Silver remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 0 from 2.

Gold Bug Index dropped 3.72 points (2.11%) last week. Intermediate downtrend was confirmed on a move below 170.89. 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 remained last week at -6.

Platinum dropped $33.70 per ounce (3.37%) last week. Trend changed to down on a move below $960.30. Relative strength turned Neutral. Trades below its 20 day MA. Momentum: down

Palladium dropped $54.50 (5.23%) last week. Trend remains neutral. Relative strength changed to Negative. PALL moved below its 20 day MA. Momentum turned down.

Copper dropped 8.8 cents per lb (2.74%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed to Neutral from Positive. Copper dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 4.

BMO Base Metal ETF lost $0.22 (1.80%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. Units remain below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 4.

Lumber dropped $43.00 (8.16%) last week. Trend remains up. Relative strength changed to Neutral from Positive. Units fell below their 20 day MA. Momentum turned down.

Grain ETN gained $1.15 (4.38%) last week. Trend remains up. Relative Strength remains Positive. Units remained above their 20 day MA. Momentum remains up.

Agriculture ETF dropped $2.12 (3.32%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Neutral. Units moved below their 20 day moving average last week. Short term momentum indicators are trending down. Technical score slipped last week to 2 from 4.

Interest Rates

Yield on 10 year Treasuries slipped 1.4 basis points (0.48%) last week. Yield dropped below its 20 day moving average. Short term momentum indicators have turned down.

Price of the long term Treasury ETF added $0.22 (0.19%) last week. Units moved above their 20 day moving average.

Volatility

The VIX Index jumped 3.15 last week (19.10%) and briefly moved above 25.

Sectors

Daily Seasonal/Technical Sector Trends for March 2nd 2018

Green: Increase from previous day

Red: Decrease from previous day

StockTwits Released on Friday @EquityClock

Technical action by S&P 500 stocks to 10:45: Bearish. No breakouts. Breakdowns: $F $HLT $LEG $MCD $FL $WYNN $LNC $LUK, $MRK $XRAY $CMI $ETN $IR $MAS

McDonald's $MCD, a Dow Jones Industrial stock moved below $152.89 extending an intermediate downtrend.

Merck $MRK, a Dow Jones Industrial stock moved below $63.36 and $53.18 extending an intermediate downtrend.

Lithium ETN $LIT moved below $33.05 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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