Tech Talk for Monday February 4th 2019

U.S. equity index futures were mixed this morning. S&P 500 futures were unchanged in pre-opening trade.

Chipotle (CMG $527.20) is expected to open higher after Wedbush raised its target price to $440 from $400.

Keycorp (KEY $16.63) is expected to open lower after Wedbush downgraded the stock to Neutral from Outperform.

Dell Technologies (DELL $15.63) is expected to open higher after JP Morgan raised its target price to $65 from $60.

Clorox gained $8.14 to $158.00 after reporting higher than consensus fiscal second quarter earnings.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/02/01/stock-market-outlook-for-february-4-2019/

Note seasonality charts on the Baltic Dry Index and Nonfarm Payrolls.

The Bottom Line

U.S. and Canadian equity markets extended their bear market rally last week Focus was on commodity sensitive securities that are responsive to a flat-to-lower U.S. Dollar Index including precious metals, base metals, agriculture, forest products and energy related equities and Exchange Traded Funds.

Observations

Technical action by individual S&P 500 stocks was bullish last week. Number of stocks breaking intermediate resistance totaled 59 while number of stocks breaking support totaled 7. The Up/Down ratio rose to (119/321=) 0.37.

Commodity stocks continued moving higher thanks to weakness in the U.S. Dollar Index.

Fourth quarter earnings reports by major U.S. companies continue to pour in this week. Another 103 S&P 500 companies and one Dow Jones Industrial company (Disney) are scheduled to report. See separate report below.

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, State of the Union address, possibly another shut down of the government.

Results to date from reporting S&P 500 companies have been encouraging. At the end of last week, 46% of S&P 500 companies had reported quarterly results: 70% beat consensus earnings estimates and 62% beat consensus revenue estimates. Consensus now calls for a 12.4% increase in fourth quarter earnings and a 6.6% increase in revenues on a year-over-year basis.

Prospects for S&P 500 were reduced once again. According to FactSet, first quarter earnings are expected to decline 0.8% but revenues are expected to increase 5.7%. Second quarter earnings are expected to increase 1.6% and revenues are expected to increase 5.1%. Third quarter earnings are expected to increase 2.7% and revenues are expected to increase 4.9%. Fourth quarter earnings are expected to increase 9.9% and revenues are expected to increase 6.0%. For all of 2019, earnings are expected to increase 5.6% and revenues are expected to increase 5.3%.

Major U.S. companies are seeking places to invest their new found cash flow following changes in U.S. tax laws. Look for additional news about share buybacks, increased dividends, take overs, employee bonuses and wage increases with release of fourth quarter results.

Seasonal influences in the first and second quarters of a U.S. Pre-Presidential Election Year are favourable.

Economic News This Week

Editor's Note: Previous U.S. economic reports that were delayed due to the U.S. Government shutdown tentatively are expected to be released this week. Accordingly, the enclosed list is not complete.

November Factory Orders to be released at 10:00 AM EST on Monday is expected to increase 0.3% versus a drop of 2.1% in October.

January Non-Manufacturing ISM to be released at 10:00 AM EST on Tuesday is expected to slip to 57.5 from 58.0 in December.

State of the Union address by President Trump is scheduled at 8:00 PM EST on Tuesday

Fourth quarter Productivity to be released at 8:30 AM EST on Wednesday is expected to increase 1.9% versus a gain of 2.3% in the third quarter.

U.S. November Trade Deficit to be released at 8:30 AM EST on Wednesday is expected to slip to $54.0 billion versus $55.0 billion in October.

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to drop to 220,000 from 253,000 last week.

January Canadian Housing Starts to be released at 8:15 AM EST on Friday are expected to slip to 205,500 from 213,419 in December.

Canadian January Employment to be released at 8:30 AM EST on Friday is expected to slip to 6,000 from 9,300 in December. January Unemployment Rate is expected to increase to 5.7% from 5.6% in December.

Selected Earnings News This Week

Trader's Corner.

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for February 1st 2019

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for February 1st 2019

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for February 1st 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

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 86.20 from 66.40. Percent remains intermediate overbought, but continues to trend higher.

Bullish Percent Index for S&P 500 stocks increased last week to 59.40 from 50.20. The Index remains intermediate neutral, but continues to trend higher.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average increase last week to 82.28 from 77.97. Percent remains intermediate overbought, but continues to trend higher.

Bullish Percent Index advanced last week to 47.28 from 44.77. The Index remains intermediate neutral, but continues to trend higher.

Thank you to Michael Campbell

Michael was a gracious host at the World Outlook Conference in Vancouver on Friday and Saturday. The conference was well attended by over 1,000 participants Lots of interesting and timely presentations from a wide variety of presenters including Tech Talk. Notable presentations were offered by John Johnston, Mark Leibovit and Josef Schachter.

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

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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