Tech Talk for Monday January 14th 2019

U.S. equity index futures were lower this morning. S&P 500 futures were down 22 points in pre-opening trade. Index futures are responding to a lower than expected trade surplus reported by China.

Brrrrrr, it's cold outside. Biggest snow storm during the past two years has hit the U.S. Mid-west and Eastern U.S. Natural gas jumped $0.27 to$3.37 per MBtu.

Goldcorp added $1.01 to $10.70 U.S. and Newmont Mining dropped $1.72 to $33.16 after Newmont Mining offered to acquire the company in a share exchange priced at 0.3280 shares on Newmont for each Goldcorp share. Estimated value of the deal is $10 billion U.S.

Lululemon gained $4.14 to $136.30 after the company raised its fourth quarter sales guidance.

Gannett (GCI $9.75) is expected to open higher after MNG offered to purchase the company at $12 per share. The offer is valued at $13.23 billion

Abercrombie & Fitch (ANF $20.11) is expected to open higher after the company raised its fourth quarter guidance.

Citigroup slipped $0.19 to $56.50 after the bank reported higher than consensus fourth quarter earnings, but lower than consensus fourth quarter revenues.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/01/11/stock-market-outlook-for-january-14-2019/

Note seasonality chart on the U.S. Consumer Price Index

WALL STREET RAW RADIO

SATURDAY, JANUARY 12, 2019 -

WITH YOUR HOST, MARK LEIBOVIT

SPECIAL GUESTS: DON VIALOUX, BILL MURPHY (FROM GATA.ORG), HENRY WEINGARTEN, HARRY BOXER AND SINCLAIR NOE

https://tinyurl.com/y9tk6cba

Excerpts from Don Vialoux comments on Wall Street Raw

The bear market rally by U.S. and Canadian equity markets continues. Equity markets are benefitting from the end of tax loss selling in late December, dropping inflation pressures and anticipation of a trade deal between the U.S. and China.

The U.S. Dollar continues to roll over from a double top pattern. Commodity and commodity equity prices have responded by moving higher. Best performing equity sectors last week included energy, oil services, base metals and forest product stocks. Seasonal influences have appeared earlier than usual this year. All of these sectors normally enter into a period of seasonal strength starting this week for a seasonal trade lasting until at least the end of April.

Fourth quarter earnings reports start to pour in this week. Notable next week are reports by major U.S. banks. Investors are anticipating a 10.6% year-over-year increase in earnings by S&P 500 companies. CEOs love to include good news when releasing fourth quarter reports including positive guidance for the next year. This year, look for extra good news including additional share buybacks and dividend increases.

Economic focus this week is on U.S. December Retail Sales to be released on Wednesday. How did Christmas sales do this year? Consensus is calling for strong year-over-year gains.

The Bottom Line

U.S. and Canadian equity markets extended their tradable bear market rally last week Traders with a time horizon of three months or less can take advantage of a recovery from oversold levels by owning equities that have favourable seasonality and positive strength relative to North American equity indices. Focus is on commodity sensitive securities that are responsive to a flat-to-lower U.S. Dollar Index including precious metals, base metals, agriculture and energy related equities and Exchange Traded Funds.

Observations

Technical action by individual S&P 500 stocks was quiet last week. Number of stocks breaking intermediate resistance totaled 18 while number of stocks breaking support totaled 1. The Ratio of stocks in an intermediate uptrend/ stocks in an intermediate downtrend increased last week to (98/375 =) 0.26 from 0.23.

Fourth quarter earnings reports by major U.S. companies start to pour in this week: 34 S&P 500 companies are scheduled to report (notably the banks). Four Dow Jones Industrial companies are scheduled to report.

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

Medium term technical indicators in Canada also continued moving 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) are overbought.

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

Short term political concerns remain elevated. Issues include heightened tariff wars between the U.S. and China, shut down of Congress related to extension of government deficit limits and the Mueller investigation.

Longer term outlook for earnings and sales by S&P 500 companies remains positive, but lower than previous consensus. According to FactSet, consensus for the fourth quarter of 2018 calls for a 10.6% increase in earnings (down from 11.4% last week) and a 5.9% increase in sales (down from 6.1%). Consensus for first quarter 2019 calls for a 1.8% increase in earnings (down from 2.9%) and a 6.2% increase in sales (down from 7.3%). Consensus for second quarter 2019 calls for a 2.9% increase in earnings (down from 3.7%) and a 5.3% increase in sales (down from 6.0%). Consensus for third quarter 2019 calls for a 3.6% in earnings (down from 4.3%) and a 5.1% increase in sales (down from 5.9%). Consensus for fourth quarter 2019 calls for a 11.8% increase in earnings (down from 12.1%) and a 6.5% increase in sales (up from 6.0%). Consensus for 2019 calls for a 6.9% increase in earnings (down from 7.4%) and a 5.5% increase in sales (down from 6.0%).

Major U.S. companies are seeking places to invest their new found cash flow following changes in U.S. tax laws. Look for anticipation of 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. Average gain per period for the Dow Jones Industrial Average since 1929 is 5.2% in the first quarter and 4.5% in the second quarter.

The U.S. Dollar Index extended a double top pattern last week, an encouraging technical sign for commodities and commodity related equities and Exchange Traded Funds (particularly if the U.S. and China are able to reach a trade agreement).

Economic News This Week

(U.S. dates and data are tentative due to partial closure of U.S. government services)

December Producer Price Index to be released at 8:30 AM EST on Tuesday is expected to slip 0.1% versus a gain of 0.1% in November. Excluding food and energy, December Producer Price Index is expected to increase 0.2% versus a gain of 0.3% in November.

January Empire State Manufacturing Survey to be released at 8:30 AM EST on Tuesday is expected to increase to 12.00 from 10.90 in December.

December Retail Sales to be released at 8:30 AM EST on Wednesday are expected to increase 0.2% versus a gain of 0.2% in January. Excluding food and energy, December Retail Sales are expected to increase 0.2% versus a gain of 0.2% in November.

November Business Inventories to be released at 10:00 AM EST on Wednesday are expected to increase 0.5% versus a gain of 0.6% in October.

Beige Book is released at 2:00 PM EST on Wednesday.

December Housing Starts to be released at 8:30 AM EST on Thursday are expected to slip to 1,250, 000 units from 1,256,000 units in November.

January Philly Fed Manufacturing Index to be released at 8:30 AM EST on Thursday is expected to increase to 10.0 from 9.1 in December.

Canadian December Consumer Price Index to be released at 8:30 AM EST on Friday is expected to increase to 1.8% on a year-over-year basis from 1.7% in November.

December Capacity Utilization to be released at 9:15 AM EST on Friday is expected to remain unchanged from November at 78.5. December Industrial Production is expected to increase 0.3% versus a gain of 0.6% in November.

January Michigan Consumer Sentiment to be released at 10:00 AM EST on Friday is expected to slip to 97.1 from 98.3 in December.

Earnings News This Week

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for January 11th 2019

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for January 11th 2019

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for January 11th 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

Technical action by S&P 500 stocks to 10:15: Quiet. Intermediate breakout: $NFLX on analyst upgrades. No breakdowns.

Editor's Note: After 10:15, intermediate breakouts included CRB and VRTX. No breakdowns.

'Tis the season for Netflix $NFLX to move higher!

Metro $MRU.CA, a TSX 60 stock moved above $48.09 to an all-time high extending an intermediate uptrend.

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 40.00 from 11.80. Percent continues to recover from a deeply oversold level.

Bullish Percent Index for S&P 500 stocks increased last week to 40.00 from 22.00. The Index continues to recover from a deeply oversold level.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average increased last week to 60.91 from 32.78. Percent continues to recover from an intermediate oversold level.

Bullish Percent Index for TSX stocks increased last week to 40.41 from 35.10 The Index continues to recover from an intermediate oversold level.

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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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