Tech Talk for Monday December 5th 2022
U.S. equity index futures were lower this morning. S&P 500 futures were down 21 points in pre-opening trade.
Broadcom slipped $0.80 to $540.00 after Susquehanna lowered its target price from $680 to $650.
Lululemon added $0.03 to $386.02 after Stifel Nicolaus raised its target price from $400 to $450.
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2022/12/clip_image0021-2.png "clip_image002[1]")
Tractor Supply (TSCO $224.94) is expected to open higher after Wells Fargo raised its target price from $250 to $255.
EquityClock's Daily Comment
Headline reads "The lack of risk-taking in this market as stocks have moved higher presents concern".
http://www.equityclock.com/2022/12/03/stock-market-outlook-for-december-5-2022/
Technical Scoop for December 5th from David Chapman and www.EnrichedInvesting.com
The Bottom Line
So far, North American equity indices are following their seasonal pattern for the month of December: As indicated in a study released by www.EquityClock.com last week, the S&P 500 has a history of recording a small negative return in the first half of December followed by the strongest two week period of the year during the second half of the month.
Strongest influence in the first half of December is yearend transactions for tax purposes. Tax loss selling pressures this year are expected to be more intense than usual due to significant unrealized losses in 2022 that can be "written off" by selling before the end of the year and subsequently by applying to realized gains recorded in previous years.
Strongest influence in the second half of December is the "Santa Claus rally" phenomenon. Recent polls show that investors and consumers are in a more "joyous mood" this year as the end of the COVID 19th pandemic approaches: They are willing to spend more during the current Christmas season. Recent U.S. "Black Friday" polls indicated a 9% increase in retail sales over the same period last year.
Economic focus is on the Federal Reserve's decision on interest rates scheduled for release on December 14th. Consensus calls for one last increase in the Fed Fund rate by 0.50% to 4.25%-4.50%. However, the decision will be influenced by economic news this week including November Non-manufacturing ISM Purchasing Managers Index on Monday and the November Producer Price Index on Friday.
Consensus for Earnings and Revenues for S&P 500 Companies
Analysts once again lowered earnings estimates for the remainder of 2022. As of Friday, 99% of S&P 500 companies had reported third quarter results. According to www.factset.com final third quarter earnings on a year-over-year basis are expected to increase 2.5% and revenues are expected to increase 10.9% (versus previous increase two weeks ago at 10.8%). Fourth quarter earnings are expected to decrease 2.4% (versus previous decrease of 2.1%) and revenues are expected to increase 4.4% (versus previous increase of 4.5%). For 2022 earnings are expected to increase 5.2% and revenues are expected to increase 10.5%.
Preliminary earnings estimates for 2023 also moved lower. According to www.factset.com first quarter 2023 earnings are expected to increase 1.5% (versus previous increase at 1.6%) and revenues are expected to increase 3.8% (versus previous increase at 3.9%). Second quarter 2023 earnings are expected to increase 0.8% (versus previous increase at 0.9%) and revenues are expected to increase 1.2% (versus previous increase at 1.3%). For all of 2023, earnings are expected to increase 5.6% (versus previous increase at 5.7%)) and revenues are expected to increase 3.4%.
Economic News This Week
October Factory Orders released at 10:00 AM EST on Monday are expected to increase 0.6% versus a gain of 0.3% in September..
November Non-manufacturing ISM PMI released at 10:00 AM EST on Monday is expected to slip to 53.1 from 54.4 in October.
October U.S. Trade Deficit released at 8:30 AM EST on Tuesday is expected to increase to $79.90 billion from $73.30 billion in September.
October Canadian Merchandise Trade Balance released at 8:30 AM EST on Tuesday is expected to increase to a surplus of $1.34 billion from $1.14 billion in September.
Third quarter U.S. Non-farm Productivity released at 8:30 AM EST on Wednesday is expected to drop 0.5% versus a gain of 0.3% in the second quarter.
Bank of Canada's interest rate to Canada's major banks released at 10:00 AM EST on Wednesday is expected to increase from 3.75% to 4.25%.
November Producer Price Index released at 8:30 AM EST on Friday is expected to increase 0.2% versus a gain of 0.2% in October. On a year-over-year basis, November PPI is expected to increase 7.2% versus a gain of 8.0% in October. Excluding food and energy, year-over-year November PPI is expected to increase 5.9% versus a gain of 6.7% in October.
December Michigan Consumer Sentiment released at 10:00 AM EST on Friday is expected to remain unchanged at 56.8 set in November.
Selected Earnings News This Week
Trader's Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for December 2nd 2022
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for December 2nd 2022
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for December 2nd 2021
Green: Increase from previous day
Red: Decrease from previous day
Attention: All Gold Bugs
A free on-line money show focusing on precious metals and related equities/ETFs is scheduled for December 6th and December 7th. Following is a link showing the list of speakers and their topics:
https://online.moneyshow.com/2022/december/money-metals-mining-virtual-expo/full-schedule/
Following is the link for registration.
https://online.moneyshow.com/2022/december/money-metals-mining-virtual-expo/registration/
Links offered by valued providers
Michael Campbell's Money Talks for December 3rd
Michael Campbell's MoneyTalks - Complete Show (mikesmoneytalks.ca)
Mark Leibovit comment for December 1st
Interest Rate Manipulation, Gold, US Dollar, FTX, Geo-Cosmic Events - HoweStreet
Greg Schnell discusses Tesla and solar stocks. ETF covering the sector is TAN.
https://stockcharts.com/articles/canada/2022/12/tesla-changes-the-reality-dist-32.html
David Keller offers "Three trendlines I'm watching next week".
Three Trendlines I’m Watching Next Week | The Mindful Investor | StockCharts.com
Bruce Fraser asks "Will the QQQ swing into gear"?
Will the QQQ Swing into Gear? | Wyckoff Power Charting | StockCharts.com
Mary Ellen McGonagle says "These stocks have been stars of third quarter earnings season. Many are poised to trade much higher.
Tom McClellan discusses "The gold price move ETF traders weren't betting on".
The Gold Price Move ETF Traders Weren’t Betting On | Top Advisors Corner | StockCharts.com
David Keller notes "The U.S. Dollar breaks below its 200 day moving average".
US Dollar Breaks Below 200-Day MA | David Keller, CMT | The Final Bar (12.02.22) - YouTube
Ross Clark discusses "Stock Markets, Santa Claus Rally, Gold, Silver".
This Week in Money - HoweStreet
Bob Hoye discusses "Klaus Schwab's "Perfect" Government Showing Cracks"
This Week in Money - HoweStreet
Victor Adair's Trading Desk Notes for December 3rd
https://victoradair.ca/trading-desk-notes-for-december-3-2022/
Links from Mark Bunting and www.uncommonsenseinvestor.com
19 High-Quality Stocks – Uncommon Sense Investor
5 Stocks for 2023 – Uncommon Sense Investor
10 Stocks to Own Through 2025 – Uncommon Sense Investor
10 Cheap U.S. Stocks With Safe Dividends | Morningstar
Seasonality Chart of the Day
As noted by Greg Schnell in the above link, the solar energy sector has an improving technical profile. It also has a favourable seasonal profile at this time of year. According to www.EquityClock.com optimal period of seasonal strength on the Invesco Solar Energy ETF $TAN is from November 20th to February 20th
Seasonal Chart Analysis
Analysis of the Invesco Solar ETF (NYSE:TAN) seasonal charts above shows that a Buy Date of November 20 and a Sell Date of February 20 has resulted in a geometric average return of 10.54% above the benchmark rate of the S&P 500 Total Return Index over the past 13 years. This seasonal timeframe has shown positive results compared to the benchmark in 10 of those periods. This is a good rate of success and the return strongly outperforms the relative buy-and-hold performance of the stock over the past 13 years by an average of 23.31% per year.
Disclosure: Don Vialoux holds a position in TAN.
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
Technical Notes for Friday
TMX Group $X.TO, a BNN Bloomberg top pick on Friday selected by Javed Mirza from Canaccord Genuity moved above $140.41 late last week to an all-time high extending an intermediate uptrend.
AMEX Biotech ETF $FBT moved above $157.20 extending an intermediate uptrend.
Aerospace & Defense iShares $ITA moved above $112.91 to a three year high extending an intermediate uptrend. Invesco Aerospace and Defense ETF $PPA moved above $79.67 to an all-time high extending an intermediate uptrend.
Boeing $BA an S&P 100 stock led the advance by the Aerospace & Defense sector by moving above $179.32 extending an intermediate uptrend.
Lockheed Martin $LMT an S&P 100 stock moved above $491.59 to an all-time high extending an intermediate uptrend.
General Dynamics $GD an S&P 100 stock moved above $254.40 to an all-time high extending an intermediate uptrend.
Wells Fargo $WFC an S&P 100 stock moved below $45.47 completing an intermediate double top pattern.
Base metal stocks and related ETFs extended their intermediate uptrends. Southern Copper $SCCO, one of the largest copper producers in the world moved above $61.89 extending an intermediate uptrend.
CORN ETN $CORN moved below $26.06 extending an intermediate downtrend.
Peloton $PTON a NASDAQ 100 stock moved above $12.02 extending an intermediate uptrend.
Bank of Montreal $BMO.TO a TSX 60 stock moved above $133.98 and $134.62 extending an intermediate uptrend. The stock responded to release of fiscal fourth quarter results.
Dollarama $DOL.TO a TSX 60 stock moved above $83.89 to an all-time high extending an intermediate uptrend.
S&P 500 Momentum Barometers
The intermediate term Barometer slipped 0.20 on Friday, but gained 1.20 last week to 91.00. It remains Overbought. Trend remains up.
The long term Barometer slipped 1.20 on Friday, but added 0.50 last week to 63.80. It remains Overbought. Trend remains up.
TSX Momentum Barometers
The intermediate term Barometer gained 1.27 on Friday and 2.97 last week to 84.75. It remains Overbought. Trend remains up.
The long term Barometer slipped 1.27 on Friday, but gained 6.66 last week. It remains Neutral. Trend remains up.
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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