Tech Talk for Monday April 13th 2020

U.S. equity index futures were lower this morning. S&P 500 futures were down 12 points in pre-opening trade;

Crude oil gained $0.31 to $23.07 after OPEC and its allies agreed to reduce their oil production quotas by 9.7 million barrels from May 1st to June 30th.

Starbucks slipped $0.54 to $73.34 after Wedbush lowered its target price from $84 to $71.

Carnival dropped $0.35 to $12.07 after Wedbush lowered its target price from $59 to $17.

KB Homes lost $0.57 to $22.00 after Susquehanna downgraded the stock from Positive to Neutral.

The Bottom Line

Equity markets continued to recover last week from the "Black Swan event". Spread of the coronavirus remains a major influence on equity prices. The VIX Index remained elevated but appears to have passed an intermediate peak. World equity markets generally remain intermediate oversold and continue to show technical signs of a recovery.

Observations

The VIX Index (better known as the Fear Index) remains elevated, but appears to have passed its peak, typical after an intermediate bottom for the U.S. equity market has been reached.

Medium term technical indicators for U.S. equity markets (e.g. Percent of S&P 500 stocks trading above their 50 day moving average) remain oversold and recovering. See end of this report for chart.

Medium term technical indicators for Canadian equity markets also remain oversold and recovering. See end of this report for chart.

Most short term short term momentum indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) moved higher last week.

Short term momentum indicators for Canadian markets and sectors also moved higher last week.

Year-over-year consensus earnings for S&P 500 companies were reduced significantly again last week in recognition of a greater impact from the coronavirus. According to FactSet, first quarter 2020 earnings are expected to drop 10.0%, the largest drop since the third quarter of 2009 (versus a decline of 7.3% last week) and revenues are expected to increase 1.0% (versus an increase of 1.5% last week). Second quarter 2020 earnings are expected to fall 20.0% (versus a drop of 15.1% last week) and revenues are expected to drop 3.8% (versus a drop of 2.1% last week). Third quarter earnings are expected to fall 8.5% (versus a fall of 4.8% last week) and revenues are expected to decrease 0.4% (versus a gain of 0.9% last week). Fourth quarter earnings are expected to decrease 8.5% (versus a gain of 1.7% last week) and revenues are expected to increase 1.9% (versus a gain of 2.8% last week). Earnings for all of 2020 are expected to decrease 8.5% (versus a previous decrease of 4.5%) and revenues are expected to decrease 0.1% (versus a previous gain of 0.8%).

Economic News This Week

March Retail Sales to be released at 8:30 AM EDT on Wednesday are expected to drop 7.0% versus a decline of 0.5% in February. Excluding auto sales March Retail Sales are expected to drop 3.0% versus a decline of 0.4% in February.

April Empire State Manufacturing Survey to be released at 8:30 AM EDT on Wednesday is expected to drop to -35.00 from -21.50 in March.

March Capacity Utilization to be released at 9:15 AM EDT on Wednesday is expected to drop to 73.7% from 77.0% in February.

March Industrial Production to be released at 9:15 AM EDT on Wednesday is expected to drop 4.2% versus a gain of 0.6% in February.

Bank of Canada is scheduled to announce its Overnight Lending Rate to Canadian Banks at 10:00 AM EDT on Wednesday. No change from 0.25% is expected.

Beige Book is scheduled to be released at 2:00 PM EDT on Wednesday.

March U.S. Housing Starts to be released at 8:30 AM EDT on Thursday are expected to drop to 1.307 million units from 1.599 million units in February.

April Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to fall to -30.00 from -12.7 in March.

Selected Earnings News This Week

Forty S&P 500 companies are scheduled to report quarterly results (including five Dow Jones Industrial companies).

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for April 9th 2020

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Seasonal/Technical Commodities Trends for April 9th 2020

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for April 9th 2020

Green: Increase from previous day

Red: Decrease from previous day

Investors Digest Report on the Healthcare Sector

Don Vialoux was interviewed last week by Investors Digest. An investment in the Healthcare sector was supported based on current fundamental, seasonal and technical prospects.

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

StockTwits released on Thursday @EquityClock

U.S. Bank stocks and related ETFs responded strongly to the Federal Reserve’s announcement to support U.S. credit markets. Nice short term breakouts on a wide variety of stocks and ETFs in the sector: $KBE $KRE $XLF $JPM $COF $C.

Teck Corp $TECK.B.CA, a TSX 60 stock moved above $11.73 completing a short term base building pattern.

Auto $CARZ and auto component stocks have completing short term base building patterns .

Canadian crude oil prices are responding to expectations that OPEC and partners will reduce targeted production. Cdn. Crude Oil Index $CCX.CA completed a short term base building pattern by moving above $5.00.

S&P/TSX Global Gold Index iShares $XGD.CA moved above $16.94 extending a short/intermediate uptrend. Currently testing its all-time high at $18.42

More short term breakouts by NASDAQ 100 stocks above short term base building patterns: $SIRI $CTAS $CPRT

Brazil iShares $EWZ moved above $26.45 completing a short term base building pattern.

India ETF $PIN moved above $14.50 completing a short term base building pattern.

Silver equities and their related ETF $SIL are leading the precious metals sector on the upside. Nice short term breakouts in $WPM $PAAS

S&P 500 Momentum Barometer

Percent of S&P500 stocks trading above their 50 day moving average increased last week from 5.03 to 24.14. Percent remains intermediate oversold and recovering.

TSX Momentum Barometer

Percent of TSX stocks trading above their 50 day moving average increased last week from 6.09 to 21.74. Percent remains intermediate oversold and recovering.

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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