Tech Talk for Monday April 1st 2019
U.S. equity index futures were higher this morning. S&P 5 00 futures were up 20 points in pre-opening trade.
Index futures responded to news that the China Caixin March Manufacturing PMI increased to 50.8 versus consensus at 49.9. An Index above 50 implies GDP growth at an increasing rate. The Shanghai Composite Index gained 2.6%.
Index futures were virtually unchanged following release of February Retail Sales at 8:30 AM EDT. Consensus was an increase of 0.3% versus a gain of 0.2% in January. Actual was a drop of 0.2%..
Hain Celestial slipped $0.33 to $22.79 after JP Morgan downgraded the stock to Neutral from Overweight.
Wells Fargo (WFC $48.32) is expected to open lower after Keefe Bruyette and Deutsche Bank downgraded the stock.
EquityClock's Daily Market Comment
Following is a link:
http://www.equityclock.com/2019/03/30/stock-market-outlook-for-april-1-2019/
Note seasonality charts on S&P 500 Index, New Home Sales and Canadian GDP.
WALL STREET RAW RADIO
SATURDAY, MARCH 30, 2019
WITH YOUR HOST, MARK LEIBOVIT
SPECIAL GUESTS: DON VIALOUX, HARRY BOXER, SINCLAIR NOE AND RALPH CASE
Excerpt from Don Vialoux's comments on Wall Street Raw
U.S. equity indices were slightly higher last week. Indices were helped by anticipation of a trade deal between China and the U.S. On Friday, the Shanghai Composite Index jumped 3.2%.
Historically, the month of April has been a profitable month for North American equity investors. Annual shareholders meetings frequently are held in April when first quarter earnings reports are released. CEOs love to give shareholders good news about first quarter earnings and they usually offer an encouraging outlook for the remainder of the year. However, the traditional advance by North American equity markets in April may not happen this year. CEOs have less to cheer about at their annual meetings. Analysts continue to lower first quarter earnings estimates as the U.S. Dollar Index rises. Recent strength by the long term Treasuries bond market indicates that the U.S. economy is slowing.
Talks by leading Democrat Presidential candidates about raising the capital gains tax rate on individual investors did not help equity prices last week. Some are advocating a tax on capital gains equivalent to the tax on ordinary income.
Cannabis stocks were under minor pressure last week. The sector is taking a rest following a strong recovery since the last week in December. The cannabis ETF (HMMJ) in Canada is up 66% from its low near the end of December. News from the sector remains encouraging. Retail stores launch legal sale of recreational cannabis in Ontario on Monday.
Precious metals and precious metal equity prices moved lower last week on strength in the U.S. Dollar Index. However, the sector has a history of bottoming at the end of March and moving higher into early June.
The Bottom Line
U.S. and Canadian equity markets recovered last week. Intermediate momentum indicators for North American equity markets stalled at intermediate overbought levels.
Observations
U.S. equity markets continued to show technical signs of losing upside momentum. Most broadly based U.S. equity indices (i.e. Dow Jones Industrial Average, Dow Jones Transportation Average, Russell 2000 Index and equal weighted S&P 500 Index) reached an intermediate peak on or about February 25th and have moved sideways to slightly lower since then. The notable exception is the NASDAQ Composite Index thanks to its heavier-than-average weight in the Technology sector.
Ditto for the TSX Composite Index. The Index has traded in a tight flat range since February 25th and is virtually unchanged since then.
Technical action by individual S&P 500 stocks moved slightly higher last week. Number of stocks breaking intermediate resistance totaled 24 while number of stocks breaking support totaled 15. The Up/Down ratio increased to (267/133=) 2.01 from 1.93.
Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) inched up last week, but remain overbought. See charts near the end of this report
Medium term technical indicators in Canada eased last week, but remain overbought. See charts near the end of this report.
Short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum) moved higher last week.
Short term technical indicators for Canadian markets and sectors also moved higher last week.
Short term political concerns remain elevated. Issues include heightened tariff wars between the U.S. and China and anti-Trump hearings initiated by the Democrat controlled House of Representatives
Prospects for S&P 500 earnings were reduced again last week. According to FactSet, first quarter earnings are expected to decline 3.9% on a year-over-year basis (versus a decline of 3.7% last week) but revenues are expected to increase 4.8% (down from 4.9% last week). Second quarter earnings are expected to increase 0.1% and second quarter revenues are expected to increase 4.5% (down from 4.6%). Third quarter earnings are expected to increase 1.7% (down from 1.8%) and revenues are expected to increase 4.3% (down from 4.4%). Fourth quarter earnings are expected to increase 8.3% and fourth quarter revenues are expected to increase 4.8%. For all of 2019, earnings are expected to increase 3.7% (down from 3.8%) and revenues are expected to increase 4.9%.
Seasonal influences in the first and second quarters of a U.S. Pre-Presidential Election Year are favourable. Gains this year already have exceeded average gains in the first and second quarters.
Economic News This Week
February Retail Sales to be released at 8:30 AM EDT on Monday are expected to increase 0.3% versus a gain of 0.2% in January. Excluding auto sales, February Retail Sales are expected to increase 0.4% versus a gain of 0.9% in January.
January Business Inventories to be released at 10:00 AM EDT on Monday are expected to increase 0.3% versus a gain of 0.6% in December
February Construction Spending to be released at 10:00 AM EDT on Monday is expected to decrease 0.3% versus a gain of 1.3% in January.
March Manufacturing ISM to be released at 10:00 AM EDT on Monday is expected to remain at 54.2 released in February.
February Durable Goods Orders to be released at 8:30 AM EDT on Tuesday are expected to drop 1.2% versus a gain of 0.3% in January. Excluding transportation orders, February Durable Goods Orders are expected to increase 0.2% versus a decline of 0.1% in January.
March ADP Private Employment to be released at 8:15 AM EDT on Wednesday is expected to drop to 170,000 from 183,000 in February.
March ISM Services to be released at 10:00 AM EDT on Wednesday is expected to slip to 58.0 from 59.7 in February.
Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 219,000 from 211,000 last week.
March Non-farm Payrolls to be released at 8:30 AM EDT on Friday is expected to increase to 170,000 from 20,000 in February. March Unemployment Rate is expected to remain unchanged from February at 3.8%. March Hourly Earnings are expected to increase 0.3% versus a gain of 0.4% in February.
March Canadian Employment to be released at 8:30 AM EDT on Friday is expected to drop 10,000 versus a gain of 55,900 in February. March Unemployment Rate is expected to remain unchanged from February at 5.8%
Earnings News
Strength in the U.S. Dollar Index in the first quarter of 2019 relative to the same period last year will have a significant negative impact on first quarter revenues and earnings reports by U.S. based companies with international exposure. The U.S. Dollar Index averaged 96 in the first quarter this year versus 90 in the first quarter last year.
Editor's Note: Think Dow Jones Industrial Average companies: most realize more than 50% of their revenues and earnings from international operations.
Three S&P 500 companies and one Dow Jones Industrial company are scheduled to release quarterly results this week
Trader's Corner.
Equity Indices and related ETFs
Daily Seasonal/Technical Equity Trends for March 29th 2019
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for March 29th 2019
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for March 29th 2019
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
StockTwits released on Friday @EquityClock
Technical action by S&P 500 stocks to 10:00: Bullish. Intermediate breakouts: $GPC $KMX $CL $CELG $IR $JEC. No breakdowns.
Editor's Note: After 10:00 AM EDT, breakouts included CPRT, RMD, TSCO and HOLX. No breakdowns.
BlackBerry $BB $BB.CA moved above $12.78 Cdn and $9.60 U.S. on better than consensus sales/earnings extending an uptrend
Base Metals ETF $XBM.CA moved above $12.81 extending an intermediate uptrend. ‘Tis the season for strength to early May!
Base metal equity prices are responding to strength in copper and zinc prices. $XBM.CA $ZMT.CA $PICK $DBB
Canada #GDP down 3.8% (NSA) in January, slightly weaker than 3.5% decline that is average for first month of the year. $MACRO #CDNecon #CAD
US New Home Sales up 14.3% (NSA) in February, stronger than 13.5% increase that is average for February. $MACRO #Economy #Housing
Corn ETN $CORN moved below $15.35 extending an intermediate downtrend
S&P 500 Momentum Barometers
Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 66.80 from 62.80. Percent remains intermediate overbought.
Bullish Percent Index for S&P 500 stocks increased last week to 69.00 from 67.80. The Index remains intermediate overbought.
TSX Momentum Barometers
Percent of TSX stocks trading above their 50 day moving average slipped last week to 65.84 from 67.08. Percent remains intermediate overbought.
Bullish Percent Index for TSX stocks slipped last week to 56.79 from 57.66. The Index remains intermediate overbought.
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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