Tech Talk for Monday December 16th 2024
Pre-opening Comments for Monday December 16th
U.S. equity index futures were higher this morning. S&P 500 futures were up 19 points at 8:35 AM EST.
Canada's Fall Economic Statement by the Federal Government is released later today.
Microstrategy gained $18.52 to $427.98 on news that the stock will join the NASDAQ 100 Index next week
Super Micro Computer dropped $1.48 to $36.45 on news the stock will leave the NASDAQ 100 Index next week.
Apple added $0.64 to $248.77 on plans to introduce a foldable iPhone
EquityClock's Stock Market Outlook for December 16th
The percent of stocks trading above 20-day moving averages has fallen to near oversold territory, providing an appealing setup to buy into beaten down market segments for the Santa Claus Rally period ahead. See:
https://equityclock.com/2024/12/13/stock-market-outlook-for-december-16-2024/
Technical Scoop for December 16th from David Chapman and www.EnrichedInvesting.com
https://enrichedinvesting.com/library/
Market Watch comment released yesterday
Record inflows into U.S. stocks to drive 'Santa rally' in last days of 2024, Goldman says
The Bottom Line
Focus is on the FOMC Interest Rate Decision on the Fed Fund Rate released at 2:00 PM EST on Wednesday. Consensus calls for a 0.25% reduction.
The S&P 500 Index currently is following its traditional pattern in the month of December: Flat to slightly lower in the first half followed by the "Santa Claus rally" in the second half.
Chart courtesy of www.EquityClock.com
Consensus for Earnings and Revenues for S&P 500 companies
Source: www.factset.com
Year-over-year earnings and revenue gains accelerate in the fourth quarter from the third quarter. Consensus calls for an 11.8% earnings increase (down from 11.9% last week) and a 4.7% revenue increase (down from 4.8% last week).
For all of 2024, consensus calls for a 9.5% earnings increase (down from 9.6% last week) and a 5.1% revenue increase.
Consensus for earnings gains in 2025 was unchanged last week. First quarter earnings are expected to increase 12.8 % on a year-over-year basis and revenues are expected to increase 5.2%. Second quarter earnings are expected to increase 12.1% and revenues are expected to increase 5.4%. Third quarter earnings are expected to increase 15.2% and revenues are expected to increase 5.7%. Fourth quarter earnings are expected to increase 16.9% and revenues are expected to increase 6.6%. For all of 2025 earnings are expected to increase 15.0% and revenues are expected to increase 5.8% (up from 5.7% last week)
Economic News This Week
December Empire State Manufacturing Survey is released at 8:30 AM EST on Monday
Bank of Canada governor Maclem speaks at 3:45 PM EST on Monday.
November U.S. Retail Sales released at 8:30 AM EST on Tuesday are expected to increase 0.5% versus a gain of 0.4% in October.
November Canada Consumer Price Index is released at 8:30 AM EST on Tuesday
November U.S. Industrial Production released at 9:15 AM EST on Tuesday is expected to increase 0.1% versus a 0.3% drop in October. November Capacity Utilization is expected to increase to 77.2% from 77.1% in October.
October U.S. Business Inventories released at 10:00 AM EST on Tuesday are expected to increase 0.2% versus a 0.1% increase in September.
November U.S. Housing Starts released at 8:30 AM EST on Wednesday are expected to increase to 1.340 million units from 1.311 million units in October.
FOMC Interest Rate Decision on the Fed Fund Rate is released at 2:00 PM EST on Wednesday. Press conference is held at 2:30 PM EST. Consensus calls a 0.25% reduction in the Fed Fund Rate.
Bank of England interest rate decision released at 8:15 AM EST is expected to maintain its lending rate at 4.75%.
December Philly Fed is released at 8:30 AM EST on Thursday
Updated U.S. Third Quarter GDP released at 8:30 AM EST on Thursday is expected to grow at a 2.8% annual rate.
November U.S. Existing Home Sales released at 10:00 AM EST on Thursday are expected to increase to3.97 million units from 3.96 million units in October.
November Leading Economic Indicators released at 10:00 AM EST on Thursday are expected to slip 0.1% versus a 0.4% drop in October.
November Core PCI Price Index is released at 8:30 AM EST on Friday
November Personal Income released at 8:30 AM EST on Friday is expected to increase 0.4% versus a 0.6% increase in October. November Personal Spending is expected to increase 0.5% versus a 0.4% gain in October.
October Canadian Retail Sales are released at 8:30 AM EST on Friday
December Michigan Consumer Sentiment released at 10:00 AM EST on Friday is expected to increase to 74.0 from 71.8 in November.
Selected Earnings News This Week
Trader's Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for December 13th 2024
Green: Increase from previous day
Red: Decrease from previous day
Source for all positive seasonality ratings: www.EquityClock.com
Commodities
Daily Seasonal/Technical Commodities Trends for December 13th 2024
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for December 13th 2024
Green: Increase from previous day
Red: Decrease from previous day
Technical Notes
Global Metals iShares $PICK moved below $38.34 extending an intermediate downtrend. Leading the drop was Teck Resources $TECK a TSX 60 stock on a move below US$44.44 and Cdn$62.67.
Global X Copper Miners ETF $COPX moved below $40.72 extending an intermediate downtrend.
S&P 100 and NASDAQ 100 stock moving below support extending intermediate downtrends included Biogen $BIIB, Bristol-Myers $BMY, Regeneron $REGN, American Electric Power $AEP, ConocoPhillips $COP, NXP Semiconductor $NXPI,
Imperial Oil $IMO.TO a TSX 60 stock moved below support at Cdn$96.72 completing a double top pattern.
Brookfield Infrastructure $BIP a TSX 60 stock moved below US$33.05 and US$32.79 completing a Head & Shoulders pattern.
Changes Last Week
Links offered by valued providers
Michael Campbell's Money Talks for December 14th
(Includes an interview with Don Vialoux on the stock market outlook for 2025)
December 14 Episode (mikesmoneytalks.ca)
Should You Be Taking Stock Profits Now? Mark Leibovit
Should You Be Taking Stock Profits Now? - HoweStreet
The AI Trade and Market Multiples: David Rosenberg's Insights on Current Market Conditions
The AI Trade and Market Multiples: David Rosenberg's Insights on Current Market Conditions - YouTube
Fitch’s outlook for Canadian banks in 2025
Fitch’s outlook for Canadian banks in 2025 - YouTube
Wilson on Stocks in 2025, Volatility, Fed, Correction Call
Wilson on Stocks in 2025, Volatility, Fed, Correction Call - YouTube
CHART THIS with David Keller, CMT Friday 12/13/24
https://www.youtube.com/watch?v=CLkizBUbRVw
Identifying GREAT Trades and Looking Ahead to 2025 Using RRG Charts: Tom Bowley
Historically - How Have Tariffs Worked Out? Bob Hoye
Historically - How Have Tariffs Worked Out? - HoweStreet
Trading Desk Notes for December 14, 2024:Victor Adair
Trading Desk Notes for December 14, 2024 - HoweStreet
Stock Market Outlook for 2025
Don Vialoux was a guest on Michael Campbell's December 14th show. Michael's Money Talks Following are notes developed for the interview:
History shows that U.S. equity markets record modest gains in Post U.S. Presidential Election years after an incumbent party loses and a new President is elected with a new mandate. On Inauguration Day January 20th 2025, control of the U.S. political agenda is passed from the losing Democrats to the winning Republicans. On average since 1950, the S&P 500 Index under these circumstances has recorded an annual gain of only 4.8% implying an upside target for the S&P 500 Index in 2025 of 6,400. Historic trends during the year are as follows
- A 2.5% drop from January to mid-March
- A slight recovery from mid-March to early May
- A typical flat to lower move from early May to the end of September
- A typical yearend rally from the end of September to the end of December
Will Santa Claus come to Bay Street and Wall Street late this year? North American equity indices enter their strongest three week period in the year from the third week in December to the first week in January. According to www.EquityClock.com, the S&P 500 Index during the past 50 years has advanced 72% of the selected time period with an average return per period of 1.92%. The TSX Composite Index has a similar track record. The index has advanced 85% of the past 34 selected periods for an average return per period of 2.00%. This three week period of strength in North American equity markets frequently is called "The Santa Claus rally". The Santa Claus rally is helped partially this year by U.S. consumers who plan to increase their spending in order to buy international goods prior to President Trump's proposed implementation of a 25% tariff on all imported goods coming from Canada and Mexico.
What are North American equity market prospects during the first quarter of 2025? Chances are high that North American equity markets will follow their historic pattern by developing a flat to slightly lower trend from early January to mid-March 2025. With the S&P 500 Index up over 27 % and the TSX Composite up over 22 % to date in 2024, many investors have exceptional unrealized trading profits and are waiting until the New Year for tax reasons before taking at least partial profits. Technically, U.S. and Canadian equity indices are substantially overbought. Profit taking pressure will limit upside potential for equity indices on both sides of the border in early 2025.
What about political influence on equity markets in early 2025? History notes that enacting a promised new mandate by a new President following Inauguration Day frequently is not greeted favourably by U.S. equity markets, particularly when the mandate calls for aggressive action. Trump's recent comments infer launch of an aggressive agenda .Approval of action on specific mandates by Congress often is delayed and/or falls short of expectations. Initial efforts to implement the agenda through Congress in early 2025 is likely to draw short term caution by investors
Beyond mid-March, U.S. equity prices have a history of following their traditional pattern:
U.S. equity indices move higher from mid-March to the end of the year for a modest annual gain.
Historic outperformance by the TSX Composite relative to the S&P 500 Index in the first quarter may not happen in 2025. The TSX Composite Index has a history of outperforming the S&P 500 Index from the third week in December to the first week in March. That's the period of time when many Canadian investors are contributing to their RRSP and TFSA plans. At least some of their contributions subsequently are investing in the stock market and Canadian stock prices respond accordingly. This year the TSX Composite Index also is expected to respond favourably to short term economic stimulation triggered by a temporary elimination of provincial and federal sales tax from mid-December to mid- February.
Outperformance of Canadian stock prices relative to U.S. stock prices in the first quarter is expected to be muted this time. Trade negotiations in the first quarter between the U.S. and Canada with the new Trump administration are expected to create investor uncertainty: Trump has proposed a 25% tariff on all Canadian products exported to the U.S. Canadian sectors most sensitive to Trump's proposal include energy, forest products, steel, base metals and autos. Share prices of Canadian energy and forest product stocks already have dropped significantly during the past four weeks in anticipation of the news and already have reached deeply oversold levels.
S&P 500 Momentum Barometers
The intermediate term Barometer dropped another 2.80 on Friday and plunged 10.80 last week to 47.60. It remains Neutral. Daily downtrend was extended on Friday.
The long term Barometer dropped 0.80 on Friday and plunged 4.60 last week to 66.60. It remains Overbought. Daily downtrend was extended on Friday.
TSX Momentum Barometers
The intermediate term Barometer dropped 10.96 on Friday and plunged 14.15 last week to 42.47. It remains Neutral. Daily downtrend was extended.
The long term Barometer dropped 2.74 on Friday and fell 3.20 last week to 67.58. It remains Overbought. Daily downtrend was extended.
Disclaimer: Seasonality ratings 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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