Tech Talk for Monday February 25th 2019

U.S. equity index futures were higher this morning. S&P 500 futures were up 13 points in pre-opening trade. Index futures responded to a 5.6% increase in the Shanghai Composite Index to 2961.28 in overnight trading on news that the Trump Administration plans to delay tariff increases on Chinese imports beyond the self-imposed March 1st deadline.

Newmont Mining added $0.12 to 36.60 after Barrick Gold offered to acquire the company in a share exchange offer valued at $18 billion. Each Newmont Mining share will receive 2.5694 shares of Barrick Gold.

General Electric gained $1.13 to $11.30 after the company reached an agreement to sell its biopharma business to Danaher for $21.4 billion.

Norwegian Cruise Lines added $0.65 to 56.00 after Macquarie upgraded the stock to Outperform from Neutral.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/02/22/stock-market-outlook-for-february-25-2019/

Note seasonality chart on Canadian Retail Sales.

WALL STREET RAW RADIO

SATURDAY, FEBRUARY 23, 2019

WITH YOUR HOST, MARK LEIBOVIT.

SPECIAL GUESTS: DON VIALOUX, RAY MERRIMAN, HENRY WEINGARTEN,

SINCLAIR NOE AND RALPH CASE.

http://tinyurl.com/y2tz56do

Excerpts from Don Vialoux comments on Wall Street Raw

The bear market rally in U.S. equity markets continued last week. The S&P 500 Index pushed higher to just below 2800 where resistance set last November was set. Ditto for the Dow Jones Industrial Average with resistance at 26,300! The S&P 500 Index had gained 16.5% and the Dow Jones Industrial Average has advanced 19.5% from their December 26th lows and clearly are overbought.

Commodity stocks continued to forge ahead last week. The CRB Index moved above 182 to complete a reverse Head & Shoulders pattern. It was driven partially by a move by crude oil above $55.75 per barrel. Crude oil also completed a reverse Head & Shoulders pattern. The CRB Index also was helped on Friday by a breakout by the base metals ETN: DBB to establish an intermediate uptrend. Units are equally weighted in copper, zinc and aluminum futures. 'Tis the season for strength in industrial commodity prices and crude oil until May!

Cannabis stocks remain in the news. Kilroy completed another acquisition on Wednesday. Couche Tard, the largest convenience store owner in North America with over 15,000 stores announced an alliance with Canopy Growth for possible launch of specialty cannabis stores starting with a proposed store in London, Ontario.

Precious metal prices continued to move higher. Notable on Friday was a breakout by the Platinum ETN:PPLT above $79.00 extending an intermediate uptrend. The precious metals sector has a history of moving higher until the annual Prospectors and Developers convention in Toronto. This year the convention is held from March 3rd to March 6th.

The Bottom Line

The bear market rally in U.S. and Canadian equity markets showed technical signs of extending last week. North American equity markets remain intermediate overbought.

Observations

Technical action by individual S&P 500 stocks was bullish last week. Number of stocks breaking intermediate resistance totaled 50 while number of stocks breaking support totaled 6. The Up/Down ratio rose to (223/187=) 1.19 from 0.90.

Fourth quarter earnings reports by major U.S. companies are approaching the end.

89% of S&P 500 companies have reported to date. Earnings on a year-over-year basis increased 13.1% and revenues increased 6.6%. Another 39 S&P companies are scheduled to release results this week, including one Dow Industrial company (Home Depot).

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 trending higher last week. See charts near the end of this report

Medium term technical indicators in Canada also continued trending higher last week. 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) remain overbought.

Short term technical indicators for Canadian markets and sectors also remain overbought.

Short term political concerns remain elevated. Issues include heightened tariff wars between the U.S. and China and expected release of the Mueller report.

Prospects for S&P 500 earnings were reduced once again last week. According to FactSet, first quarter earnings are expected to decline 2.7% (down from a decline of 2.2% last week) but revenues are expected to increase 5.2% (down from 5.3%). Second quarter earnings are expected to increase 0.7% and second quarter revenues are expected to increase 4.7%. Third quarter earnings are expected to increase 2.2% and revenues are expected to increase 4.5%. Fourth quarter earnings are expected to increase 8.8% and fourth quarter revenues are expected to increase 5.4%. For all of 2019, earnings are expected to increase 4.5% (down from 4.8%) and revenues are expected to increase 4.9%. For all of 2020, earnings are expected to increase 11.4% and revenues are expected to increase 5.6%

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

December Wholesale Inventories to be released at 10:00 AM EST on Monday is expected to increase 0.2% versus a gain of 0.3% in November.

December Housing Starts to be released at 8:30 AM EST on Tuesday are expected to slip to 1.253 million units from 1.256 million units in November (i.e. a 0.2% drop in December versus a 3.2% gain in November).

February Consumer Confidence Index to be released at 10:00 AM EST on Tuesday is expected to increase to 125.0 from 120.2 in January.

Federal Reserve Chairman Powell testifies at 10:00 AM EST on Tuesday.

February ADP Employment Report is to be released at 8:15 AM EST on Wednesday. January was 213,000

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 220,000 from 216,000 last week.

January Canadian Consumer Price Index to be released at 8:30 AM EST on Wednesday is expected to increase 0.1% versus a decline of 0.1% in December (1.4% year-over-year versus 2.0% in December).

December U.S. Fourth Quarter GDP to be released at 8:30 AM EST on Thursday is expected to grow at a 2.4% rate versus a 3.4% rate in the third quarter.

January Personal Income to be released at 8:30 AM EST on Friday is expected to increase 0.3% versus a gain of 0.2% in December. January Personal Spending is expected to decrease 0.2% versus a gain of 0.4% in December.

Canadian December GDP is to be released at 8:30 AM EST on Friday is expected to be unchanged versus a slip of 0.1% in November. GDP December year-over-year is expected to drop to 1.0% from 1.7% in November.

February ISM Manufacturing Index to be released at 10:00 AM EST on Friday is expected to slip to 55.9 from 56.6 in January.

February Michigan Consumer Sentiment Index to be released at 10:00 AM EST on Friday is expected to increase to 95.6 from 95.5 in January.

Selected Earnings News This Week

Trader's Corner.

Equity Indices and related ETFs

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for February 22nd 2019

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for February 22nd 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 Released on Friday @EquityClock

Canada #Retail #Sales up a mere 2.2% (NSA) in December, well below the 15.3% 20-year average increase for the month. $MACRO #CDNecon #CAD

Technical action by S&P 500 stocks to 10:00: Mixed. Intermediate breakouts: $HPE $VRSN $PPL . Breakdowns: $M $KHC

Editor's Note: After 10:00 AM EST, intermediate breakouts included AIV, ROK, V, COO, FLR, LEG, TRV, STX, T, PFE, RHI, PPG and ADP. Breakdown: EVRG. CVS.

Platinum ETN $PPLT moved above $78.84 extending an intermediate uptrend

Magna International $MG.CA $MGA, a TSX 60 stock moved above $69.97 Cdn extending an intermediate uptrend.

Base Metals ETN $DBB: copper, zinc, aluminum moved above $16.59 setting an intermediate uptrend. ‘Tis the season for strength to May!

Visa $V, a Dow Jones Industrial stock moved above $145.47 extending an intermediate uptrend

Another base metals stock breakout! Alcoa $AA moved above $30.28 completing a double bottom pattern.

Travelers $TRV, a Dow Jones Industrial stock moved above $131.00 extending an intermediate uptrend.

Pfizer $PFE, a Dow Jones Industrial stock moved above $43.12 setting an intermediate uptrend.

Auto ETF $CARZ moved above $34.36 completing a reverse Head & Shoulders pattern

Cott Corp $BCB.CA moved below $18.21 setting an intermediate downtrend

Another base metal stock breakout! First Quantum $FM.CA moved above $15.39 just at the close extending an uptrend.

Update on a previously favoured seasonal trade

Berkshire Hathaway (BRK.B $201.91) is removed from the seasonally favoured list. The stock originally was mentioned favourably on January 30th on a breakout above $205.01 with a price chart and a seasonality chart. After initial strength, the stock moved last week below its 20 day moving average, its short term momentum indicators turned down and its strength relative to the S&P 500 Index turned negative. A contributing factor was weakness on Friday in KraftHeinz, a major holding in Berkshire's investment portfolio.

http://www.equityclock.com/about/seasonal-advantage-portfolio/

Keith Richards on BNNBloomberg on Friday

Market Outlook

https://www.bnnbloomberg.ca/video/keith-richards-discusses-mastercard~1619013

Top Picks

https://www.bnnbloomberg.ca/video/keith-richards-top-picks~1619041

Past Picks

https://www.bnnbloomberg.ca/video/keith-richards-past-picks~1618997

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 92.00 from 89.40. Percent is extremely intermediate overbought.

Bullish Percent Index for S&P 500 stocks increased last week to 71.40 from 68.60. The Index is extremely overbought.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average increased last week to 87.76 from 86.92. Percent remains extremely intermediate overbought.

Bullish Percent Index for TSX stocks increased last week to 54.39 from 53.14. 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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