Tech Talk for Monday July 16th 2018
U.S. equity index futures were mixed this morning. S&P 500 futures were unchaged in pre-opening trade.
Index futures were virtually unchanged following release of economic news at 8:30 AM EDT. Consensus for the July Empire State Manufacturing Survey was a slip to 22.0 from 25.0 in June. Actual was 22.6. Consensus or June Retail Sales was an increase of 0.5% versus an upwardly revised gain of 1.3% in May. Actual was a gain of 0.5%. Excluding auto sales, consensus for June Retail Sales was an increase of 0.3% versus a gain of 0.8% in May. Actual was an increase of 0.4%.
Advanced Micro Devices gained $0.16 to $16.43 after Stiffel Nicolus raised its target price to $21 from $17.
JB Hunt added $4.97 to $126.80 after reporting higher than consensus second quarter sales and earnings.
Bank of America improved $0.29 to $28.84 after reporting higher than consensus second quarter sales and earnings.
EquityClock's Daily Market Comment
Following is a link:
http://www.equityclock.com/2018/07/15/stock-market-outlook-for-july-16-2018/
Note seasonality charts on KBW Bank Index, the VIX Index and the TSX Composite Index
WALL STREET RAW RADIO – SATURDAY, JULY 14, 2018
WITH YOUR HOST, MARK LEIBOVIT
GUESTS INCLUDE: DON VIALOUX, HENRY WEINGARTEN, HARRY BOXER AND SINCLAIR NOE
The Bottom Line
The proverbial "Summer Rally" in North American equity markets continued last week on schedule. U.S. and Canadian equity markets have a history of moving higher from late June to mid-July prior to release of encouraging second quarter corporate results. The summer rally this year will be helped by strong second quarter corporate results (20% year-over-year gain by S&P 500 companies and a 24% increase by TSX 60 companies (led by the energy sector). Thereafter, seasonal influences turn Negative from the third week in July to mid-October. Early signs of a seasonal peak appeared on Friday when Financial SPDRs moved lower despite strong second quarter earnings recorded by Citigroup, PNC Financial and JP Morgan. Traders were sellers on news. On average during the past 20 periods, the TSX Composite, S&P 500 Index and Dow Jones Industrial Average have reached a seasonal peak on July 18th. Seasonal strength at the beginning of this week will give traders an opportunity to take profits into strength. Caveat emptor!
Seasonal influences are particularly relevant during U.S. Mid-term election years. Volatility in equity markets increases from late April to mid-October due to concerns about a possible change in political control in Congress. These concerns are very real this year. Republicans control the House by 16 votes and the Senate by one vote. On average during a Mid-term election year, the controlling party loses 24 House seats to the opposition party. Anticipation of a possible change, regardless of the final result, is a major reason for a correction in North American equity markets between mid-July and October.
Ditto for Canadian equities! Seasonal influences for Canadian equity markets follow a similar pattern to the U.S. They normally recover from late June to until mid-July in anticipation of encouraging second quarter corporate results and turn negative until mid-October. Data shows that the TSX Composite Index has advanced in 13 of the past 20 periods from June 1st to October 12th. However, the seven drops in the past 20 periods were significant: five of the seven drops exceeded 12%. Accordingly, caution by equity investors is advised. Current technical, seasonal and fundamental considerations suggest that a 12% + correction by the TSX Composite Index this summer is higher than average.
Economic News This Week
July Empire State Manufacturing Survey to be released at 8:30 AM EDT on Monday is expected to slip to 22.0 from 25.0 in June.
June Retail Sales to be released at 8:30 AM EDT on Monday are expected to increase 0.5% versus a gain of 0.8% in May. Excluding auto sales, June Retail Sales are expected to increase 0.4% versus a gain of 0.8% in June.
May Business Inventories to be released at 10:00 AM EDT on Monday are expected to increase 0.4% versus a gain of 0.3% in April/
June Industrial Production to be released at 9:15 AM EDT on Tuesday is expected to increase 0.5% versus a decline of 0.1% in May. June Capacity Utilization is expected to increase to 78.2 from 77.9 in May.
Federal Reserve Chairman Powell gives his Humphrey Hawkins testimony to Congree on monetary policy at 10:00 AM EDT on Tuesday.
June Housing Starts to be released at 8:30 AM EDT on Wednesday are expected to slip to 1.32 million units (-2.2%) from 1.35 million units in May.
Beige Book is released at 2:00 PM EDT on Wednesday.
Weekly Jobless Claims to be released at 8:30 AM EDT are expected to increase to 222,000 from 214,000 last week.
July Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to increase to 22.0 from 19.9 in June.
Canada's June Consumer Price Index to be released at 8:30 AM EDT on Friday is expected to increase 0.1% (2.3% annual) versus a 0.1% in May (2.2% annual).
Canadian May Retail Sales to be released at 8:30 AM EDT on Friday is expected increase 0.7% versus a drop of 1.2% in April. Excluding auto sales, Canadian May Retail Sales are expected to increase 0.7% versus a decline of 0.1% in April.
Earnings News This Week
Observations
Technical action by individual S&P 500 stocks was bullish again last week. Number of stocks breaking intermediate resistance totaled 59 while number of stocks breaking support totaled 4. Energy, Technology and Health Care stocks were notable on the list of breakouts. The Up/Down ratio increased last week to (266/176=) 1.51 from 1.29.
Earnings focus this week is on U.S. banks and technology. Sixty S&P 500 companies (and seven Dow Jones Industrial companies) are scheduled to release second quarter results this week.
U.S. economic news focuses this week are on June Retail Sales released on Monday. Humphry Hawkins testimony to Congress on Tuesday by Federal Reserve chairman Powell also will be watched closely
Canadian economic focus this week is on the Bank of Canada's decision the Consumer Price Index released on Friday.
The U.S. Dollar Index continued to show technical signs of rolling over on entering its seasonal period of weakness at the beginning of July. A change in trend in the U.S. Dollar Index is particularly bullish for energy, precious metals and their related equities/ETFs.
Medium term technical indicators for U.S. equity markets (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) trended higher last week, typical of the "summer rally" They remain intermediate overbought
Medium term technical indicators in Canada rolled over last week but remain intermediate overbought.
Short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum) generally continued to move higher last week and are overbought
Short term technical indicators for Canadian markets and sectors also turned higher and are overbought
The outlook for S&P 500 earnings and sales remains positive: According to FactSet , second quarter 2018 earnings are expected to increase 19.9% on an 8.8% increase in sales. Third quarter earnings are expected to increase 21.5% on a 7.6% increase in sales. Fourth quarter earnings are expected to increase 17.8% on a 5.7% increase in sales. For all of 2018, earnings are expected to increase 20.0%. First quarter 2019 earnings are expected to increase 6.9% on a 5.5% increase in sales. Second quarter 2019 earnings are expected to increase 10.8% on a 4.8% increase in sales.
Short term political concerns remain elevated. Proposed U.S. tariffs against Chinese goods to be implemented in two months were increased to products valued at $200 billion NAFTA negotiations were discontinued for July and are unlikely to resume until after the U.S. mid-term elections in November. Other issues included difficult NATO negotiations, impact of revocation of the Iran nuclear weapons agreement (including pressure on users of Iranian oil by the U.S. to halt imports), more indictments announced on Friday by
Special Council on Russia's influence during the Presidential election. In addition, U.S. mid-term election political rhetoric has started and will ramp up into October.
Equity Indices and Related ETFs
Stay tuned for important changes in Seasonality rating on Jul 18th
Daily Seasonal/Technical Equity Trends for July 13th 2018
Green: Increase from previous day
Red: Decrease from previous day
Daily Seasonal/Technical Commodities Trends for July 13th 2018
Green: Increase from previous day
Red: Decrease from previous day
Daily Seasonal/Technical Sector Trends for July 13th 2018
Green: Increase from previous day
Red: Decrease from previous day
Changes Last Week
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
StockTwits Released on Friday @EquityClock
Wal-Mart $WMT, a Dow Jones Industrial stock moved above $87.59 completing a double bottom pattern.
Technical action by S&P 500 stocks to 10:00: Bullish. Intermediate breakouts included $VFC $MDT $AET $WMT $PAYX
Editor's Note: After 10:00 AM EDT, intermediate breakouts included GOOG, GOOGL, UTX, DXC, ADBE and ORCL. Breakdowns included UA and CSCO.
Alphabet $GOOG $GOOGL, a FAANG stock moved above intermediate resistance to an all-time high extending an intermediate uptrend
United Technologies $UTX, a Dow Jones Industrial stock moved above $129.03 extending an intermediate uptrend.
Consumer Discretionary iShares $XLY moved above $112.62 to an all-time high extending an intermediate uptrend.
Cisco $CSCO, a Dow Jones Industrial stock moved below $41.48 extending an intermediate downtrend.
IGM Financial $IGM.CA moved above $39.36, $39.37 and $39.38 completing a Reverse Head & Shoulders pattern.
Hap Sneddon on BNNBloomberg's Market Call on Friday
Past Picks: https://www.bnnbloomberg.ca/market-call/hap-sneddon-s-past-picks~1438583
Top Picks: https://www.bnnbloomberg.ca/hap-sneddon-s-top-picks-july-13-2018-1.1107788
Market Comment:
https://www.bnnbloomberg.ca/market-call/hap-sneddon-s-market-outlook~1438559
S&P 500 Momentum Barometer
The Barometer added 0.40 to 67.00 on Friday ( up 7.80 last week). It remains intermediate overbought.
TSX Momentum Barometer
The Barometer dropped 2.75 to 61.00 on Friday (down 4.70 last week). It remains intermediate overbought and showing signs of rolling over.
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
| Sponsored By... |
| More from the network: |