Tech Talk for Friday July 20th 2018
U.S. equity index futures were lower this morning. S&P 500 futures were down 4 points in pre-opening trade. Investors responded to comments by President Trump that China tariffs could increase to items valued at $500 billion.
The Canadian Dollar added $0.53 to U.S. 75.88 cents following release of economic news at 8:30 AM EDT. Consensus for June Consumer Prices on a year-over-year basis was an increase of 2.3% versus 2.2% in May. Actual was an increase of 2.5%. Consensus for May Retail Sales was an increase of 1.0%. Actual was an increase of 2.0%.
Microsoft added $3.62 to an all-time high at $108.02 after reporting higher than consensus quarterly sales and earnings. JP Morgan raised its target price to $115 from $110.
General Electric improved $0.04 to $13.77 after reporting higher than consensus second quarter sales and earnings.
Honeywell gained $3.48 to $151.02 after raising third quarter guidance.
![clip_image003[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2018/07/clip_image0031-3.png "clip_image003[1]")
Intuitive Surgical surged $18.70 to $539.99 after reporting higher than consensus second quarter results.
![clip_image004[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2018/07/clip_image0041-3.png "clip_image004[1]")
EquityClock's Daily Market Comment
Following is a link:
http://www.equityclock.com/2018/07/19/stock-market-outlook-for-july-20-2018/
Note seasonality charts on the Philly Fed Index, U.S. Dollar Index, Copper futures and Gold futures
Wall Street Raw
The weekly radio show on Saturday hosted by Mark Leibovit is unavailable this week due to scheduling. Following are comments by Tech Talk prepared for the show:
The Summer Rally continued as anticipated last week. Historically, the Summer Rally for U.S.and Canadian equity indices has occurred between late June and the third week in July.
Main reason for the Summer Rally has been anticipation of strong second quarter sales and earnings reports by major companies. Results released to date by S&P 500 companies for the most part have exceeded consensus estimates that are calling for a year-over year gain of 20%. Look for more good second quarter results by S&P 500 companies as the earnings report season reaches a peak next week.
Despite encouraging second quarter results by S&P 500 companies released to date, responses to reports were mixed at best. Unless blow out results were released, stock prices moved lower when companies reduced their guidance for the third quarter . Examples after the close on Wednesday included drops by American Express, eBay, Alcoa and United Rental. Traders took profits on news.
Look for more profit taking during the height of the earnings report season next week. Equity markets in the U.S. and Canada on average during the past 20 years have reached a seasonal peak on July 18th and have entered into at least a shallow correction to mid-October.
A seasonal peak in U.S. and Canadian equity markets around the third week in July is a regular occurrence for most equity markets around the world. Other equity indices that show this phenomenon include the Nikkei Average, the DAX Index, the CAC Index, London FT Index, Shanghai Composite Index and the Emerging Markets Index.
A major reason for a correction by equity markets between the third week in July and mid-October has been an increase in volatility triggered by an unexpected event. What about this year? Short term technical indicators show that North American equity markets currently are overbought and vulnerable. One possible unexpected event this year could be a full-blown trade war. Watch the VIX Index closely. A significant move by the Index above its current 12% level will be a technical sign that the correction into October has started.
StockTwits Released Yesterday @EquityClock
Technical action by S&P 500 stocks to 10:15: Mixed. Intermediate breakouts: $GPC $TJX $WMB $DHR $IBM $LOW $LKQ $HD
Technical action by S&P 500 stocks to 10:15: Mixed. Intermediate breakdowns: $IPG $GIS $MO $BBT $BK $ABBV $MCK $MYL $PWR $EBAY
Editor's Note: After 10:15 AM EDT, breakouts included MAS, MTD and AAP. Breakdowns included AA and FITB.
Palladium ETN $PALL dropped below $85.43 extending an intermediate downtrend.
Bombardier $BBD.B.CA, a TSX 60 stock moved below $4.92 completing a double top pattern.
Tahoe Resources $THO.CA moved below $6.06 setting an intermediate downtrend,
TransCanada PipeLines $TRP.CA, a TSX 60 stock moved above $57.79 extending a Reverse Head & Shoulders pattern.
Home Depot $HD, a Dow Jones Industrial stock moved above $201.60 extending an intermediate uptrend.
Uranium ETF $URA moved below $12.51 extending an intermediate downtrend. Largest holding: $CCJ.
Philadelphia Manufacturing Business Outlook Survey shows +11.3 (NSA) in July, well above average level of -7.0. $MACRO #Economy
Trader's Corner
Daily Seasonal/Technical Equity Trends for July 19th 2018
Green: Increase from previous day
Red: Decrease from previous day
Daily Seasonal/Technical Commodities Trends for July 19th 2018
Green: Increase from previous day
Red: Decrease from previous day
Daily Seasonal/Technical Sector Trends for July 19th 2018
Green: Increase from previous day
Red: Decrease from previous day
S&P 500 Momentum Barometer
The Barometer slipped 0.80 to 67.40 yesterday. It remains intermediate overbought.
TSX Momentum Barometer
The Barometer was unchanged yesterday at 63.33. It remains intermediate
overbought.
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![clip_image021[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2018/07/clip_image0211.png "clip_image021[1]"){kind=small}
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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