Tech Talk for Monday April 29th 2019

U.S. equity index futures were mixed this morning. S&P 500 futures were unchanged in pre-opening trade.

Index futures were virtually unchanged following release of economic news at 8:30 AM EDT. Consensus for March Personal Income was an increase of 0.3% versus a gain of 0.2% I February. Actual was a gain of 0.1%. Consensus for March Personal Spending was an increase of 0.7% versus an increase of 0.1% in February. Actual was an increase of 0.9%.

Restaurant Brands International (QSR.TO $89.49) is expected to open lower after reporting lower than consensus first quarter earnings.

Walt Disney gained $2.48 to $142.30 after the movie "Avenger Endgame" reported record $1.2 billion global revenues during its debut.

Gardner Denver gained $7.95 to $36.00 on news that Ingersoll-Rand is considering a merger of its compressor division with Gardner Denver's pump maker division in a share and cash deal valued at $15 billion.

Target added $2.26 to $79.38 after Barclays upgraded the stock to Overweight from Equal Weight.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/04/26/stock-market-outlook-for-april-29-2019/

Note seasonality charts on the Russell 2000 Index and the U.S. Energy sector.

The Bottom Line

U.S. equity markets were mixed again last week despite better than consensus first quarter results released to date by S&P 500 and Dow Jones Industrial companies. Strength in the U.S. Dollar Index continued to dampen enthusiasm for U.S. equities. The TSX Composite Index virtually tracked performance of U.S. equity indices.

Observations

Technical action by individual S&P 500 stocks moved mixed again last week. Number of stocks breaking intermediate resistance totaled 23 while number of stocks breaking support totaled 15. Most of the breakdowns were in the Health Care sector. The Up/Down ratio dropped to (317/100=) 3.17 from 3.04.

Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) moved slightly higher last week, but remain overbought. See charts near the end of this report

Medium term technical indicators in Canada were mixed last week, but remain intermediate 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) deteriorated slightly last week from overbought levels.

Short term technical indicators for Canadian markets and sectors also deteriorated slightly last week from overbought levels.

Short term political concerns in the U.S. remain elevated. Issues include tariff wars between the U.S. and China and anti-Trump hearings initiated by the Democrat controlled House of Representatives. Release of the Mueller report elevated political rhetoric.

Frequency of quarterly earnings reports peaks this week. Another 164 S&P 500 companies (including 6 Dow Jones Industrial companies) are scheduled to report. To date, 46% of S&P 500 companies have reported quarterly results.

Prospects for S&P 500 earnings in the first quarter improved again last week thanks.to higher than consensus results released to date. However, estimates beyond the first quarter were virtually unchanged. According to FactSet, first quarter earnings are expected to decline 2.3% on a year-over-year basis (versus a decline of 3.9% last week) but revenues are expected to increase 5.1%. Second quarter earnings are expected to slip 0.6% (versus 0.5% last week) and second quarter revenues are expected to increase 4.3% (versus 4.4% last week). Thirty two companies issued negative second quarter guidance and six companies issued positive guidance. Third quarter earnings are expected to increase 1.3% and revenues are expected to increase 4.4%. Fourth quarter earnings are expected to increase 8.1% (versus 8.2% last week) and fourth quarter revenues are expected to increase 4.8%. For all of 2019, earnings are expected to increase 3.6% (up from 3.4% last week and revenues are expected to increase 4.7%.

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.

Additional strength in the U.S. Dollar Index ETN last week dampened enthusiasm for U.S. equities (particularly equities with high international exposure).

The 5% drop by the Shanghai Composite Index during the past five trading days prior to important bi-lateral trade negotiations with the U.S. this week is disturbing.

Economic News This Week

March Personal Income to be released at 8:30 AM EDT on Monday is expected to increase 0.4% versus a gain of 0.2% in February. March Personal Spending is expected to increase 0.7% versus a gain of 0.1% in February.

February Canadian GDP to be released at 8:30 AM EDT on Tuesday is expected to increase 0.1% versus a gain of 0.3% in January.

April Chicago Purchasing Managers Index to be released at 9:45 AM EDT on Tuesday is expected to improve to 59.0 from 58.7 in March.

April ADP Private Employment Report to be released at 8:15 AM EDT on Wednesday is expected to show an increase to 180,000 from 129,000 in March.

March Construction Spending to be released at 10:00 AM EDT on Wednesday is expected to increase 0.2% versus a gain of 1.0% in February.

April ISM Manufacturing Index to be released at 10:00 AM EDT on Wednesday is expected to slip to 55.0 from 55.3 in March.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to drop to 215,000 from 230,000 last week.

First Quarter Non-farm Productivity to be released at 8:30 AM EDT on Thursday is expected slip to growth at 1.4% from 2.2% in the fourth quarter.

FOMC Statement on interest rates to be released at 2:00 AM EDT on Thursday is expected to maintain the Fed Fund Rate at 2.50%. Press conference with Fed Chair Powell is scheduled at 2:30 PM EDT.

March Factory Orders to be released at 10:00 AM EDT on Thursday is expected to increase 0.7% versus a decline of 0.5% in February.

April Non-farm Payrolls to be released at 8:30 AM EDT on Friday is expected to slip to 180,000 from 196,000 in March. April Unemployment Rate is expected to remain unchanged from March at 3.8%. April Hourly Earnings are expected to increase 0.3% versus a gain of 0.1% in March.

April ISM Services Index to be released at 10:00 AM EDT on Friday is expected to increase to 57.2 from 56.1 in March.

Selected Earnings News This Week

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for April 26th 2019

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for April 26th 2019

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for April 26th 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: Quietly bearish. Intermediate breakout: $RSC. Breakdowns: $MHK $STX $MOS.

Editor's Note: After 10:00 AM EDT, intermediate breakouts included EXR, IDXX, DRI and K. Breakdown: PKI

ARC Resources $ARX.CA moved below $8.70 setting an intermediate downtrend

Peyto Exploration $PEY.CA moved below $6.44 extending an intermediate downtrend.

Cott Corp. $BCB.CA moved above $20.40 setting an intermediate uptrend

Cineplex $CGX.CA moved above $24.68 setting an intermediate uptrend. Avenger movie launch?

West Fraser Timber $WFT.CA moved above $68.51 setting an intermediate uptrend. Responding to a 13% spike in lumber prices.

Schachter Energy Report

The April report has just been released. Josef has a "green light" on Value and Sentiment and an "orange light" on technicals. This paid service is available at www.SchachterEnergyReport.ca

Keith Richard's Blog

Following is a link:

https://www.valuetrend.ca/armchair-canadian-economics/

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average slipped 2.80 to 71.60 on Friday. Percent remains intermediate overbought and rolling over.

Bullish Percent Index for S&P 500 stocks slipped 0.40 to 74.80 on Friday. The Index remains intermediate overbought and rolling over.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average slipped another 0.59 to 58.65 on Friday. Percent dropped to intermediate neutral from intermediate overbought and continues to trend down.

Bullish Percent Index for TSX stocks was unchanged at 61.15 on Friday. It 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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