Tech Talk for Monday February 26th 2018

U.S. equity index futures were higher this morning. S&P 500 futures were up 9 points in pre-opening traded. Futures responded to a surge overnight in world equity markets.

Gold gained $9.40 to $1,339.70 per ounce on weakness in the U.S. Dollar Index

Natural gas gained $0.05 to $2.70 per MBtu following predictions by the National Center for Environmental Information (NOAA) that northern U.S. states will experience colder and wetter than average weather in the month of March.

Target (TGT $75.41) is expected to open higher after Credit Suisse initiated coverage with an Outperform rating. Target is $86.

Jon Vialoux's EquityClock Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/02/23/stock-market-outlook-for-february-26-2018/

See seasonality charts on the Utilities sector, 30 Year T-Bond Price, Euro Stoxx 600 Index, Canadian Consumer Prices and Rough Rice Futures

WALL STREET RAW RADIO – FEBRUARY 24, 2018

WITH HOST, MARK LEIBOVIT

GUESTS DON VIALOUX (EQUITYCLOCK.COM), HENRY WEINGARTEN (AFUND.COM) AND JEFFREY FRIEDLAND (INTIVABIOPHARMA.COM)

https://tinyurl.com/yadpvfvq

The Bottom Line

World equity markets and economic sensitive sectors are about to enter their second strongest period of seasonal strength in the year from the end of February to the first week in May. (Strongest period is from mid-October to the first week in January). The February to May period is bolstered by good corporate news released by CEOs at annual meeting (frequently coinciding with release of first quarter reports) combined by seasonally strong economic news related to the spring buying season (e.g. autos, homes). This year the February to May season will be helped by strong gains in corporate sales and earnings triggered by changes in U.S. tax laws. Last week, analysts raised their earnings and sales estimates again for the first quarter of 2018 and all of 2018.

Now is the time to watch closely for sectors and markets that show positive strength relative to the S&P 500 Index. They are top candidates for purchase for the late February-early May seasonal trade. Selected commodity sensitive sectors already have surfaced on the radar screen. Strength is related to weakness in the U.S. Dollar Index and rising demand for commodities, most notably from China. In addition, 'Tis the season" for commodity prices to move higher to at least the end of April. Last week, the CRB Index continued to outperform the S&P 500 Index, oil, gasoline and natural gas prices moved smartly higher and lumber prices extended their move to another all-time high. Energy and forest product stocks led the advance in equities. Look for these trends to continue.

Expected weakness in the U.S. Dollar Index and additional weakness in the Canadian Dollar relative to the U.S. Dollar Index is bullish for commodity and commodity equity prices. See the BNN interview with TD Bank's Mark McCormick released late Friday:

https://www.bnn.ca/video/time-to-be-bearish-on-the-u-s-dollar-part-1~1333777

https://www.bnn.ca/video/time-to-be-bearish-on-the-u-s-dollar-part-2~1333778

Economic News This Week

January New Home Sales to be released at 10:00 AM EST on Monday are expected to increase to 650,000 units from 625,000 units in December.

January Durable Goods Orders to be released at 8:30 AM EST on Tuesday are expected to drop 2.5% versus a gain of 2.8% in December. Excluding auto sales, January Durable Goods Orders are expected to increase 0.5% versus a gain of 0.7% in December

New Federal Reserve Chairman Jerome Powell speaks at 10:00 AM EST on Tuesday

Canadian Budget is released at 4:00 PM EST on Tuesday

Second estimate of annualized Fourth Quarter GDP to be released at8:30 AM EST on Wednesday is expected to slip to 2.5% from the first estimate at 2.6%

February Chicago PMI to be released at 9:45 AM EST on Wednesday is expected to slip to 65.0 from 65.7 in January.

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 230,000 from 222,000 last week.

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

February Manufacturing ISM to be released at 10:00 AM EST on Thursday is expected to slip to 59.0 from 59.1 in January.

January Construction Spending to be released at 10:00 AM EST on Thursday is expected to increase 0.3% versus a gain of 0.7% in December

February Consumer Sentiment to be released at 10:00 AM EST on Friday is expected to slip to 99.5 from 99.9 in January..

Earnings News This Week

Observations

Technical action by individual S&P 500 stocks remained quietly bullish last week. Number of stocks breaking resistance totaled 17 while number of stocks breaking support totaled 4. The Up/Down ratio increased last week to (199/195=) 1.02 from 0.99

U.S. economic news this week will focus on Humphrey Hawkes testimony before Congress by new Federal Reserve Chairman, Jerome Powell

Canadian economic news this week focuses on the budget on Tuesday

Fourth quarter earnings reports by S&P 500 companies have passed their peak with 90% reported to date. According to FactSet, 74% reported higher than consensus earnings and 78% reported higher than consensus revenues. Another 32 companies are scheduled to report this week.

Frequency of Canadian fourth quarter reports has passed its peak. Focus remains on Canadian banks.

Medium term technical indicators in the U.S. (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) moved higher last week. Medium term technical indicators in Canada also recovered from deeply oversold levels, but their recovery was less impressive.

Short term technical indicators for U.S. and Canadian equity markets and most sectors (mainly short term momentum) continued to move higher last week. Many moved above their 50 day moving average and major U.S. equity indices and sectors moved above their 20 day moving average on Friday.

Seasonal influences on a wide variety of U.S. and Canadian equity indices and economic sensitive sectors tend to show renewed strength starting near the beginning of March. See charts below.

The outlook for S&P 500 earnings and sales remains positive: According to FactSet, fourth quarter adjusted earnings (excluding one-time write downs related to the tax bill) are expected to increase 14.8% on an 8.2% increase in sales (up from 7.9% last week). Estimates beyond the fourth quarter of 2017 were revised higher again mainly due to changes in U.S. corporate tax laws. First quarter 2018 earnings are expected to increase 17.1% (up from 17.0% last week) on a 7.5% increase in sales (up from 7.4% last week. Second quarter 2018 earnings are expected to increase 19.0% (up from 18.9%) on a 7.8% increase in revenues. Third quarter earnings are expected to increase 20.7% (up from 20.6%) on a 6.5% increase in revenues. Fourth quarter 2018 earnings are expected to increase 16.6% (up from 16.1%) on a 5.1% increase in revenues (up from 5.0%). For all of 2018, earnings are expected to increase 18.2% (up from 17.9%) on a 6.8% increase in sales (up from 6.6%).

Short term political uncertainties remain, including North Korean "sabre rattling", struggling NAFTA negotiations and increased scrutiny by special council on Russia's influence on the Presidential election

Earnings and revenue prospects beyond the fourth quarter report season are exceptional for U.S. based companies with international exposure. Consensus for S&P 500 earnings on a year-over-year are expected to increase 18.2% in 2018. Earnings will benefit significantly from weakness in the U.S. Dollar on a year-over-year basis when revenues and earnings from international operations are translated into U.S. Dollars. For example, a U.S. based company with 50% of its earnings and revenues coming from international operations will see earnings and revenues increase by 6.8% from foreign currency translation alone following the current 13.5% fall in the U.S. Dollar Index from its high at 103.82 in January 2017. The U.S. Dollar Index averaged 100 in the fourth quarter of 2016 and 101 in the first quarter of 2017.

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for February 23rd 2018

Green: Increase from previous day

Red: Decrease from previous day

Calculating Technical Scores

Technical scores are 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.

The S&P 500 Index gained 15.08 points (0.55%0 last week. Intermediate trend remains down.

The Index moved above its 20 day moving average on Friday. Short term momentum indicators

continue to move higher.

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 51.40 from 48.00. Percent remains intermediate neutral and continues to move higher.

Percent of S&P 500 stocks trading above their 200 day moving average slipped last week to 69.60 from 70.40. Percent remains intermediate overbought.

Bullish Percent Index for S&P 500 stocks increased last week to 59.80 from 57.40, but remained below its 20 day moving average. The Index remains slightly intermediate overbought.

Bullish Percent Index for TSX stocks slipped last week to 59.60 from 59.80, but remained below its 20 day moving average. The Index remains slightly intermediate overbought.

TSX Composite Index added 185.81 points (1.20%) last week. Intermediate trend remains down (Score: -2). Strength relative to the S&P 500 Index remained Neutral (Score: 0). The Index moved above its 20 day moving average on Friday (Score: 1). Short term momentum indicators are trending up (Score: 1). Technical score increased last week to 0 from 2.

Percent of TSX stocks trading above their 50 day moving average rose last week to 30.61 from 26.12. Percent remains intermediate oversold, but trending up.

Percent of TSX stocks trading above their 200 day moving average slipped last week to 45.31 from 46.12. Percent remains intermediate neutral.

Dow Jones Industrial Average gained 90.61 points (0.36%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Neutral. The Average moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.

Bullish Percent Index for Dow Jones Industrial stocks increase last week to 63.33 from 56.67, but remained below its 20 day moving average. The Index is trending up and has recovered to an intermediate overbought level.

Bullish Percent Index for NASDAQ Composite stocks increased last week to 58.83 from 57.26, but remained below its 20 day moving average. The Index is trending up and is intermediate overbought.

NASDAQ Composite Index gained 97.92 points (1.35%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.

Russell 2000 Index gained 5.64 points (0.37%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Neutral. The Index moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increased last week to 0 from -2.

Dow Jones Transportation Average gained 76.73 points (0.73%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Negative. The Average moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increased last week to 0 from -2.

The Australia All Ordinaries Composite Index added 100.40 points (1.67%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Neutral. The Index moved above its 20 day moving average late last week. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.

The Nikkei Average gained 172.53 points (0.79%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remained Negative last week. The Average remains below its 20 day moving average. Short term momentum indicators remain up. Technical score remained last week at -2.

Europe iShares slipped $0.18 (0.38%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. Units remain below their 20 day moving average. Short term momentum indicators are trending up. Technical score slipped last week to

-4 from -2

Shanghai Composite Index gained 89.86 points (2.81%) following end of the Lunar New Year holiday. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. The Index remains below its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at -4.

Emerging Markets iShares gained $0.18 (0.36%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Units remain above their 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

Currencies

The U.S. Dollar Index added 0.80 (0.90%) last week. Intermediate trend remains down. The Index moved above its 20 day moving average. Short term momentum indicators are trending up.

The Euro dropped 1.11 (0.89%) last week. Intermediate trend remains up. The Euro dropped below its 20 day moving average. Short term momentum indicators are trending down.

Canadian Dollar dropped another US 0.56 cents (0.70%) last week. Intermediate trend remains neutral. The Canuck Buck remained below its 20 day moving average. Short term momentum indicators are trending down.

The Japanese Yen dropped 0.54 (0.57%) last week. Intermediate trend remains up. The Yen remains above its 20 day moving average. Short term momentum indicators are overbought and showing early signs of rolling over.

British Pound slipped 0.46 (0.33%) last week. Intermediate trend remains up. The Pound moved below its 20 day moving average. Short term momentum indicators have rolled over.

Commodities and Related ETFs

Daily Seasonal/Technical Commodities Trends for February 23rd 2018

Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

The CRB Index gained another 2.41 points (1.24%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. The Index moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.

Gasoline gained another $0.06 per gallon (3.11%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Gas remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

Crude Oil gained another $2.00 per barrel (3.25%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned Positive from Neutral. Crude moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increased last week to 6 from 2.

Natural Gas added $0.10 per MBtu (3.91%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. "Natty" remained below its 20 day moving average. Short term momentum indicators turned up late last week. Technical score increased last week to -4 from -6.

S&P Energy Index gained 5.07 points (1.01%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. The Index remains below its 20 day moving average. Short term momentum indicators have turned up. Technical score remained last week at -4.

Philadelphia Oil Services Index gained 4.36 points (3.19%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. The Index remains below its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 0.

Gold dropped $25.90 per ounce (1.91%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. Gold dropped below its 20 day moving average. Short term momentum indicators continue to trend upward. Technical score dropped last week to 2 from 6.

Silver slipped $0.23 per ounce (1.38%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. Silver remains below its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.

AMEX Gold Bug Index dropped 8.24 (4.46%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Index remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -6 from -2.

Platinum dropped $13.50 (1.33%) last week. Trend remains up. Relative strength remains Positive. PLAT remained above its 20 day MA. Momentum remains up.

Palladium gained $5.40 (0.52%) last week. Trend remains neutral. Relative strength improved to Positive from Neutral. PALL remained above its 20 day MA. Momentum remains up.

Copper slipped 3.7 cents per lb (1.14%) last week. Intermediate trend remained neutral. Strength relative to the S&P 500 Index remains Positive. Copper remains above its 20 day moving average. Short term momentum indicators are trending up, but showing early signs of rolling over. Technical score remained last week at 4.

BMO Base Metals ETF dropped $0.22 (1.76%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. Units dropped below their 20 day moving average. Short term momentum indicators are trending up, but showing early signs of rolling over. Technical score dropped last week to 2 to 6.

Lumber gained $19.00 (3.74%) last week. Intermediate trend remains up. Relative strength remains Positive. Lumber remains above its 20 day MA. Momentum remains up.

Grain ETN added $0.10 (0.38%) last week. Trend remains up. Relative strength remains Positive. Units remain above their 20 day MA. Momentum remains up.

Agriculture ETF gained $1.28 (2.04%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed to Positive from Neutral. Units moved above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.

Interest Rates

Yield on 10 year Treasuries dipped 0.06 (0.21%) last week. Intermediate trend remains up. Yield remains above its 20 day moving average. Short term momentum indicators are trending up, but are overbought and showing early signs of rolling over.

Price of the long term Treasury ETF slipped 0.58 (0.49%) last week. Intermediate trend remains down. Units remain below their 20 day moving average. Short term momentum indicators are trending down.

Volatility

The VIX Index dropped 2.90 (14.96%) last week. Trend remains up. The Index moved below its 20 day moving average.

Sectors and related ETFs

Daily Seasonal/Technical Sector Trends for February 23rd 2018

Green: Increase from previous day

Red: Decrease from previous day

StockTwits Released Friday on

Jon Vialoux's  @EquityClock

Technical action by S&P 500 stock to 10:15:Quiet. $HPE broke out on better than expected earnings. $GIS broke support on takeover of $BUFF.

Editor's Note: After 10:15 AM EST, breakouts included FISV, CF, MOS and JWN.

Toromont $TIH.CA moved above $58.24 to an all-time high extending an intermediate uptrend.

Fertilizer stocks breaking to new highs extending an intermediate uptrend: $MOS $CF

Editor's Note: Nutrien also gained 5.45%.

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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