Tech Talk for Monday August 19th 2019

Following is a link:

http://www.equityclock.com/2019/08/18/stock-market-outlook-for-august-19-2019/

Note seasonality chart on U.S. New Housing Starts.

Market Call Tonight on BNNBloomberg at 6:00 PM EDT

Guest analyst tonight is Jeff Parent from CastleMoore.

The Bottom Line

The traditional period of summer weakness in world equity markets continued last week despite a favourable bounce by world equity markets on Friday. Equity markets have a history of entering into a period of increased volatility at this time of year with a downward bias from mid-July to mid-October (plus or minus a week). Supplemental concerns this year include an earnings recession by major U.S. companies until the fourth quarter this year (particularly companies with extensive international operations), growing efforts by the Democrats to impeach Donald Trump, growing Middle East tensions and unsettled trade negotiations between the U.S. and China.

Observations

The VIX Index remained at elevated levels again last week, in line with its historical trend between mid-July and mid-October

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 lower again last week and are trending down See charts near the end of this report

Medium term technical indicators in Canada also moved lower again last week. Percent of TSX stocks trading above their 50 day moving average/Bullish Percent Index are trending down. See charts near the end of this report.

Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) turned lower last week despite the recovery on Friday.

Short term technical indicators for Canadian markets and sectors also turned lower last week.

A new forecast by FactSet for quarterly S&P 500 earnings and revenues was unavailable this week. According to FactSet, second quarter earnings are projected to drop 0.7% on a year-over-year basis and second quarter revenues are expected to increase 4.1%. Third quarter earnings are expected to drop 3.1% and revenues are expected to increase 3.1%. Fourth quarter earnings are expected to increase 3.9% and fourth quarter revenues are expected to increase 4.0%. For all of 2019, earnings are expected to increase 1.5% and revenues are expected to increase 4.3%. First quarter 2020 earnings are expected to increase 8.5% and revenues are expected to increase 5.6 %. Second quarter 2020 earnings are expected to increase 9.9% and revenue are expected to increase 6.4%

The U.S. Dollar Index strengthened again last week, not good for U.S. companies with major international operations that report integrated sales and earnings in U.S. Dollars

Economic News This Week

July Canadian Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.2% versus a drop of 0.2% in June (1.7% year-over-year versus 2.0% year-over-year).

July Existing Home Sales to be released at 10:00 AM EDT on Wednesday is expected to increase to 5.40 million units from 5.27 million units in June.

FOMC Meeting Minutes are released at 2:00 PM EDT on Wednesday.

Weekly Initial Jobless Claims to be released at8:30 AM EDT on Thursday are expected to slip to 216,000 from 220,000 last week.

Jackson Hole Symposium is scheduled to start on Thursday.

June Canadian Retail Sales to be released at 8:30 AM EDT on Friday are expected to drop 0.2% versus a slip of 0.1% in May.

July New Home Sales to be released at 10:00 AM EDT on Friday are expected to increase to 647,000 from 646,000 in June.

Earnings News This Week

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for August 16th 2019

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for August 16th 2019

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for August 16th 2019

Green: Increase from previous day

Red: Decrease from previous day

The Canadian Technician

Following is a link to Greg Schnell's weekly video released on Sunday:

https://www.youtube.com/watch?v=4YE-0baoA44&feature=youtu.be

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

S&P Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average dropped last week to 37.27 from 43.29. Percent changed to intermediate oversold from intermediate neutral on a move below 40.00.

Bullish Percent Index for S&P 500 stocks dropped last week to 46.60 from 50.20. The Index remains intermediate neutral and trending down.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average dropped last week to 44.40 from 51.50. Percent remains intermediate neutral and trending down.

Bullish Percent Index for TSX stocks dropped last week to 58.58 from 60.57. The Index changed to intermediate neutral from intermediate overbought on a move below 60.00 and trending down.

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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