Tech Talk for Monday February 24th 2020

Equity Index futures were lower this morning. S&P 500 futures were down 85 points to 3,259.25. Index futures responded to concerns that the coronavirus has spread beyond China.

Several sectors responded strongly to rising coronavirus concerns. Gold jumped $33.60 to U.S. $1682.20 per ounce. WTI crude oil dropped $2.02 to $51.32. Technology stocks were notably weaker. Apple fell $3.48 to $53.28. The semi-conductor ETF SMH dropped $4.40 to 145.45. Yield on U.S. 10 year Treasuries fell another 0.084 to an all-time low at 1.387%.

Intuit fell $10.57 to $287.00 after announcing \purchase of Credit Karma in a cash and share deal valued at $7 billion.

Cannabis stocks are expected to open lower after Cowen downgraded the sector from Outperform to Market Perform.

Teck Resource (TECK.B $14.45Cdn.) announced that it will not proceed with its Frontier oil sands project.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/02/21/stock-market-outlook-for-february-24-2020/

Note seasonality charts on the Technology sector, Existing Home Sales and Canadian Retail Trade.

The Bottom Line

The intermediate uptrend in World equity markets stalled last week (China was the notable exception). Most equity markets moved into an intermediate uptrend in the second week in February. The spring rally usually continues to May, but frequently is truncated in early April during U.S. Presidential Election years

Observations

Most major equity indices have a history of reaching an important seasonal low in February for an upside move into spring. History is repeating.

Medium term technical indicators for U.S. equity markets (e.g. Percent of S&P 500 stocks trading above their 50 day moving average, Bullish Percent Index) moved higher again last week and remained in intermediate overbought levels. See end of this report for charts.

Medium term technical indicators for Canadian equity markets were mixed to slightly higher last week and have returned to intermediate overbought levels.. See end of this report for charts.

Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) moved lower last week

Short term technical indicators for Canadian markets and sectors (except Precious Metals) also moved lower last week.

Consensus for fourth quarter earnings by S&P 500 companies was virtually unchanged last week: 87% of companies have released quarterly results to date. According to FactSet, blended fourth quarter earnings on a year-over-year basis are expected to increase 0.9% and fourth quarter revenues are expected to increase 3.6%.

Beyond fourth quarter reports, year-over-year consensus earnings for S&P 500 companies turn positive and earnings gains accelerate as the year progresses, albeit at a slower rate than indicated last week. According to FactSet, first quarter 2020 earnings are expected to increase 1.5% on a year-over-year basis (versus 2.1% last week) and revenues are expected to increase 4.4%. (versus 4.6% last week). Second quarter 2020 earnings are expected to increase 4.7% (versus estimate of 4.9% last week) and revenues are expected to increase 4.8%. Third quarter earnings are expected to increase 9.5% (versus previous estimate of 9.7%) and revenues are expected to increase 6.1%. Fourth quarter earnings are expected to increase 11.5% (versus previous estimate of 11.6%) and revenues are expected to increase 6.0% (versus 6.1% last week). Earnings for all of 2020 are expected to increase 7.7% (versus a previous estimate of 8.0%) and revenues are expected to increase 5.1%.versus previous estimate of 5.2%

Economic News This Week

January New Home Sales to be released at 10:00 AM EST on Wednesday are expected to increase to 705,000 from 694,000 in December.

January Durable Goods Orders to be released at 8:30 AM ETS on Thursday are expected to drop 1.5% versus a gain of 2.4% in December. Excluding Transportation Orders, January Durable Goods Orders are expected to increase 0.2% versus a decline of 0.1% in December.

Next estimate of annualized fourth quarter real GDP growth to be released at 8:30 AM EST on Thursday is expected to remain unchanged from the previous estimate at 2.1%

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 212,000 from 210,000 last week.

January Personal Income to be released at 8:30 AM EST on Friday is expected to increase 0.3% versus 0.2% in December. January Personal Spending is expected to increase 0.3% versus a gain of 0.3% in December.

Canadian December GDP to be released at 8:30 AM EST are expected to increase 0.2% versus a gain of 0.1% in November.

February Chicago PMI to be released at 9:45 AM EST on Friday is expected to increase to 45.3 from 42.9 in January.

February Michigan Consumer Sentiment to be released at 10:00 AM EST on Friday is expected to slip to 100.9 from 100.9 in January.

Earnings News This Week

Another 43 S&P 500 companies and one Dow Jones Industrial company are scheduled to report fourth quarter results this week. Highlight in Canada is the quarterly reporting by the banks.

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for February 21st 2020

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for February 21st 2020

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for February 20th 2020

Green: Increase from previous day

Red: Decrease from previous day

Observation

Gold Bug Index responded to higher gold prices by breakout on Friday to a 3.5 year high.

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

Canada Retail Trade up 1.8% in 2019, weaker than the 3.8% increase that is average for the calendar year. $MACRO #CDNecon #CAD

ExxonMobil $XOM , a Dow Jones Industrial stock moved below $59.04 extending an intermediate downtrend.

20+ Treasury Bond iShares $TLT moved above $147.42 to an all-time high extending an intermediate uptrend

Oil Services ETF $OIH moved below $10.76 extending an intermediate downtrend

Royal Bank $RY.CA, a TSX 60 stock moved above $108.61 to an all-time high extending an intermediate uptrend.

CCL Industries $CCL.B.CA, a TSX 60 stock moved below $55.28, $54.61 and $52.84 extending an intermediate downtrend.

Teck Resources $TECK $TECK.B.CA, a TSX stock moved below $16.84 Cdn and $12.72 U.S. extending an intermediate downtrend

Coal ETF $KOL moved below $8.32 extending an intermediate downtrend. Main reason for the drop is weakness in $TECK, one of the largest holdings in the ETF

Shaw Communications $SJR $SJR.B.CA, a TSX 60 stock moved below $19.36 U.S. and $25.64 Cdn. extending an intermediate downtrend

BioMarin Pharma $BMRN, a NASDAQ 100 stock moved above $93.14 extending an intermediate uptrend

21st Century Fox $FOX $FOXA, NASDAQ 100 stocks completed a Head & Shoulders pattern

Market Call Tonight on BNNBloomberg

Guest analyst at 6:00 PM tonight is Hap Sneddon from CastleMoore.

Greg Schnell's "Market Buzz"

On Friday, Greg reviewed the gold sector. Following is a link:

https://www.youtube.com/watch?v=x0DpWtYTxkE&feature=youtu.be

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average dropped last week from 67.13 to 57.51. Percent changed from intermediate overbought to intermediate neutral on a drop below 60.00 and shows early signs of trending down.

Bullish Percent Index for S&P 500 stocks was unchanged last week at 76.80. Percent remains intermediate overbought.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average slipped last week from 63.89 to 59.46. Percent changed from intermediate overbought to intermediate neutral on a move below 60.00 and once again is trending down.

Bullish Percent Index for TSX stocks dropped last week from 73.71 to 72.73. The Index remains intermediate overbought 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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