Tech Talk for Monday April 8th 2019
Following is a link:
http://www.equityclock.com/2019/04/05/stock-market-outlook-for-april-8-2019/
Note seasonality charts on the VIX Index, U.S. Energy sector, Non-farm Payrolls and Canadian Employment.
WALL STREET RAW RADIO
SATURDAY, APRIL 6, 2019
WITH YOUR HOST, MARK LEIBOVIT
SPECIAL GUESTS:
DON VIALOUX, HARRY BOXER, SINCLAIR NOE AND RALPH CASE
Excerpts from Wall Street Raw by Don Vialoux
North American equity markets continued to move higher last week. The main focus was trade negotiations between the U.S. and China. The Shanghai Composite Index gained another 5% last week. Since the Chinese New Year at the beginning of February, the Shanghai Composite Index has gained 24%.
U.S. equities and ETFs that benefit from an economic recovery in China were notable gainer last week. The base metals ETF (Symbol: PICK) gained 4.7%. The steel ETF (Symbol: SLX) advanced 4.6%.
Precious metal prices and related equities came alive in late trading on Thursday. Seasonal influences by the sector are positive from mid-March to the beginning of June. On Thursday, the Gold Bug Index popped almost 3%. Platinum broke above a double bottom pattern and jumped last week by almost 6%..
Democrats have proposed a cruel tax on U.S. investors. They call it "The Wall Street Act of 2019". The proposed tax would charge $0.10 on every $100 financial transaction. If enacted, the tax would significantly reduce frequency of transactions by arbitragers and short term traders.
The road to legalization of cannabis in the U.S. continues. Recently, the House Financial Services Committee advanced the proposed SAFE Act. The Act provides a safe harbour from financial regulators by allowing financial institutions to lend to companies in the cannabis industry. However, legislative approval of the proposal is unlikely in the short term.
The Bottom Line
U.S. and Canadian equity markets recovered last week. Intermediate momentum indicators for North American equity markets moved higher despite intermediate overbought levels. Indices continued to focus on prospects for a China/U.S. trade deal.
Observations
Technical action by individual S&P 500 stocks moved higher last week. Number of stocks breaking intermediate resistance totaled 69 while number of stocks breaking support totaled 6. The Up/Down ratio increased to (304/110=) 2.76 from 2.01.
Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) continued to move higher last week, but remain overbought. See charts near the end of this report
Medium term technical indicators in Canada moved higher 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 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 4.2% on a year-over-year basis (versus a decline of 3.9% last week) but revenues are expected to increase 4.7% (down from 4.8% last week). Second quarter earnings are expected to be unchanged (versus a 0.1% increase) and second quarter revenues are expected to increase 4.6%. Third quarter earnings are expected to increase 1.6% (down from 1.7%) and revenues are expected to increase 4.4%. Fourth quarter earnings are expected to increase 8.2% (down from 8.3%) and fourth quarter revenues are expected to increase 4.9%. For all of 2019, earnings are expected to increase 3.6% (down from 3.7%) 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 Factory Orders to be released at 10:00 AM EDT on Monday are expected to drop 0.5% versus a gain of 0.1% in January.
March Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.3% versus a gain of 0.2% in February. Excluding food and energy, March Consumer Price Index is expected to increase 0.2% versus a gain of 0.1% in February.
FOMC meeting minutes are released at 2:00 PM EDT on Wednesday
March Producer Price Index to be released at 8:30 AM EDT on Thursday is expected to increase 0.3% versus a gain of 0.1% in February. Excluding food and energy, March Producer Price Index is expected to increase 0.2% versus a gain of 0.1% in February.
Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 211,000 from 202,000 last week.
March Michigan Consumer Sentiment Index to be released at 10:00 AM EDT on Friday is expected to slip to 98.0 from 98.4 in February.
Earnings News This Week
Focus this week is on U.S. bank reports released on Friday
Trader's Corner
Equity Indices and related ETFs
Daily Seasonal/Technical Equity Trends for April 5th 2019
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for April 5th 2019
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for April 5th 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 comments released on Friday @EquityClock
Nonfarm Payrolls up 0.5% (NSA) In March, slightly weaker than the 0.6% average increase for the month. $MACRO #Economy #Employment
Technical action by S&P 500 stocks to 10:00: Bullish. Intermediate breakouts: $DG $VIAB $FTI $WY $GWW $FBHS. No breakdowns.
Editor's Note: After 10:00 AM EDT, breakouts included DISCA DISCK, CF, BWA, OXY, AIG, PRU, TROW, EQT, ILMN, ADS, KHC, DO, IVZ and D. No breakdowns.
Mid-cap SPDRs $MDY moved above $353.79 extending an intermediate uptrend.
Nutrien $NTR.CA, a TSX 60 stock moved above $73.03 Cdn. extending an intermediate uptrend
Calfrac Well Services $CFW.CA moved above $3.70 extending an intermediate uptrend.
Toromont Industries $TIH.CA moved above $70.22 to an all-time high extending an intermediate uptrend.
Cenovus $CVE.CA moved above $12.40 extending an intermediate uptrend.
Mexico ETF $EWW moved above $45.76 extending an intermediate uptrend.
Canadian Natural Resources $CNQ.CA moved above $38.07 completing a reverse Head & Shoulders pattern.
#Employment in Canada effectively unchanged (NSA) in March, weaker than the 0.2% average increase for the month. $MACRO #CDNecon #CAD
George Weston $WN.CA, a TSX 60 stock moved above $97.70 completing a reverse Head & Shoulders pattern.
Jeff Parent from CastleMoore on BNNBloomberg's Market Call
Following are links:
Market Outlook
https://www.bnnbloomberg.ca/video/jeff-parent-s-market-outlook~1653918
Top Picks
https://www.bnnbloomberg.ca/video/jeff-parent-s-top-picks~1653942
Past Picks
https://www.bnnbloomberg.ca/video/jeff-parent-s-past-picks~1653921
S&P 500 Momentum Barometers
Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 84.17 from 66.80. Percent remains intermediate overbought.
Bullish Percent Index for S&P 500 stocks increased last week to 75.20 from 69.00. The Index remains intermediate overbought.
TSX Momentum Barometers
Percent of TSX stocks trading above their 50 day moving average increased last week to 74.90 from 65.84. Percent remains intermediate overbought.
Bullish Percent Index for TSX stocks was unchanged last week at 56.97. The Index remains intermediate neutral.
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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