Tech Talk for Monday June 5th 2023
U.S. equity index futures were higher this morning. S&P 500 futures were up 2 points at 8:30 AM EDT.
Crude oil added $1.88 to US73.59 per barrel after Saudi Arabia announced reduction of its oil production by one million barrels per day.
Circor International jumped $15.53 to $47.20 after the company agreed to be acquired by KKR for $49.00 per share. The cash transaction is valued at $1.6 billion.
Apple advanced $1.55 to an all-time high at $182.53 prior to start today of the company's World Wide Developers Convention. New products are expected to be announced.
Target slipped $0.85 to $132.37 after KeyBanc Capital downgraded the stock from Overweight to Sector Weight.
EquityClock's Daily Comment
Headline reads "Instantly, this market has a vastly different appearance than what it was showing just a week ago".
http://www.equityclock.com/2023/06/03/stock-market-outlook-for-june-5-2023/
The Bottom Line
U.S. and Canadian equity indices and related ETFs ended the week with improving technical profiles, typical of their historic trend to the first week in June. They also have a history of moving lower between now and the last week in June.
News to watch this week! Frequency of corporate earnings reports by major U.S. and Canadian companies quietens. Only six S&P 500 companies are scheduled to report. No TSX companies are scheduled to report. Traders will focus on news from OPEC + announced on Sunday and Monday. Crude oil Production quotas are expected to remain unchanged. Apple's World Wide Developers Keynote presentation on Monday will announce new products. Watch for the focus on Artificial Intelligence (AI).
History shows that the technology sector leads strength by U.S. equity indices from late May until the day after the World Wide Developers Keynote presentation. Thereafter, the technology sector leads U.S. equity indices on the downside until the last week in June. The good news is that U.S. equity indices have a history of moving higher during the second quarter earnings season lasting from late June to at least the third week in July. Look for history to repeat!
Trader attention during the next two weeks is on interest rate news from the next FOMC meeting held June 13th and June 14th. Individual members of the Committee hinted last week that they likely will "stand aside" from announcing major changes at the next meeting as they consider relevant economic data points. The latest poll by economists indicated that 70% of participants expect no change in the Fed Fund Rate at the next meeting. Current rate is 5.0%-5.15%. Now, the FOMC Committee has entered the traditional 10 day "quiet period" prior to release of news. The most important data point this week impacting the Fed's decision is the May ISM Non-manufacturing PMI report released at 8:30 AM EDT on Wednesday.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.Factset.com
Frequency of first quarter results continues to wind down. Another 2% of reports were released last week with 99% of S&P 500 companies reported to date: 78% have reported higher than consensus earnings per share and 75% have reported higher than consensus revenues (down from 76% last week). Consensus calls for a year-over-year drop in first quarter earnings of 2.1% and an increase in first quarter revenues of 4.1%.
Earnings and revenue estimates for remainder of the year eased slightly. Consensus for the second quarter calls for a drop of 6.4% in earnings (versus a drop of 6.3% last week) and a drop of 0.3% in revenues. Consensus for the third quarter calls for an increase of 0.9% in earnings (versus an increase of 1.0% last week) and a 1.2% increase in revenues. Consensus for the fourth quarter calls for an 8.3% increase in earnings (versus an increase of 8.4% last week) and a 3.5% increase in revenues (versus an increase of 3.2% last week). For all of 2023, consensus calls for an increase of 1.2% in earnings (versus a gain of 1.3% last week) and a 2.4% increase in revenues.
Economic News
Source: www.Investing.com
April U.S. Factory Orders released at 10:00 AM EDT on Monday are expected to increase 1.1% versus a gain of 0.4% in March.
May ISM Non-manufacturing PMI released at 10:00 AM EDT on Monday is expected to slip to 51.8 from 51.9 in April.
April Canadian Trade Balance released at 8:30 AM EDT on Wednesday is expected to slip to $0.20 billion from $0.97 billion in March.
Bank of Canada announcement on interest rates for Canada's banks is released at 10:00 AM EDT. Consensus calls for no change at 4.50%, but with a warning that a rate reduction is unlikely to occur any time soon.
April U.S. Wholesale Inventories released at 10:00 AM EDT on Thursday are expected to decrease 0.2% versus unchanged in March.
Canadian May Employment released at 8:30 AM EDT on Friday is expected to slip to 20,000 from 41,400 in April. May Unemployment Rate is expected to increase to 5.1% from 5.0% in April.
Selected Earnings News This Week
Source: www.Investing.com
Trader's Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for June 2nd 2023
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for June 2nd 2023
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for June 2nd 2023
Green: Increase from previous day
Red: Decrease from previous day
Source for positive seasonal ratings: www.equityclock.com
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
Technical Chart of the Day
Technology SPDRs (Symbol: XLK) has recorded an exceptional move since the beginning of 2023. Technical score currently is (2+2+1+1) = 6:
Intermediate trend is up. Score: 2
Strength relative to S&P 500: Positive: Score: 2
Trades above its 20 day moving average: Score: 1
Daily momentum indicators (Stochastics, RSI, MACD) are trending up. Score: 1
Note that daily momentum indicators are overbought and showing early signs of rolling over
Technical Notes for Friday
S&P 500 SPDRs moved above $426.37 to a 14 month high extending an intermediate uptrend.
The NASDAQ Composite Index moved above 13,181.09 to a 14 month high extending an intermediate uptrend.
Caterpillar $CAT a Dow Jones Industrial Average stock moved above $221.96 completing a double bottom pattern.
American Express $AXP a Dow Jones Industrial Average stock moved above intermediate resistance at $166.55
IBM $IBM a Dow Jones Industrial Average stock advanced above $130.83 completing a double bottom pattern.
Xcel Energy $XEL a NASDAQ 100 stock moved below $62.34 extending an intermediate downtrend.
T-Mobil $TMUS a NASDAQ 100 stock moved below $129.55 extending an intermediate downtrend. Weakness in the telecom sector was related to news that Amazon may enter the wireless industry.
Telus $T-TO a TSX 60 stock moved below $25.61 extending an intermediate downtrend.
Links offered by valued providers
Is the Rush to AI a "Bull Trap"? - HoweStreet
Some New Charts Suggest This Leg Continues: Greg Schnell June 02, 2023 at 01:36 PM
Some New Charts Suggest This Leg Continues | The Canadian Technician | StockCharts.com
MICHAEL CAMPBELL'S MONEYTALKS - COMPLETE SHOW
Michael Campbell's MoneyTalks - Complete Show (mikesmoneytalks.ca)
5 Potential Breakouts | Larry Tentarelli | Your Daily Five (06.02.23)
5 Potential Breakouts | Larry Tentarelli | Your Daily Five (06.02.23) - YouTube
Jim Cramer on May jobs report: This is why I’m going for a skip on rate hikes
Jim Cramer on May jobs report: This is why I’m going for a skip on rate hikes - YouTube
The jobs data gives the Fed reason to table rate hikes this month, says NatWest’s Michelle Girard
The Bull Case for Energy is Clear David Keller June 02, 2023
The Bull Case for Energy is Clear | The Mindful Investor | StockCharts.com
Broad Market Rally a Turning Point Erin Swenlin, Carl Swenlin June 02, 2023 at 08:01 PM
Stock Market Roadmap for 2024? | Bruce Fraser | Power Charting (06.02.23)
Stock Market Roadmap for 2024? | Bruce Fraser | Power Charting (06.02.23) - YouTube
Renaissance’s Jeff deGraaf weighs in on the believability of the market rally
Renaissance’s Jeff deGraaf weighs in on the believability of the market rally - YouTube
Breadth is Back | Guest Host Jay Woods, CMT | The Final (06.02.23)
Breadth is Back | Guest Host Jay Woods, CMT | The Final (06.02.23) - YouTube
This week in money: Howe Street: Comments by Ross Clarke, Victor Adair and Bob Hoye
This Week in Money - HoweStreet
The Glass is Half-Full for the Companies we own: Davis Rea Investment Councel
"The Glass is Half-Full for the Companies We Own." – Uncommon Sense Investor
Technical Scoop from David Chapman and www.EnrichedInvesting.com
Blowout jobs, unemployment up, narrow rally, AI rises, mining down, ceiling passes, oil rebound
S&P 500 Momentum Barometers
The intermediate term Barometer advanced 16.80 on Friday and 16.80 last week to 52.40. It changed from Oversold to Neutral on a recovery above 40.00.
The long term Barometer advanced 10.00 on Friday and 9.00 last week to 53.00. It remained Neutral.
TSX Momentum Barometers
The intermediate term Barometer advanced 11.64 on Friday and 3.88 last week to 42.24. It changed from Oversold to Neutral on a recovery above 40.00.
The long term Barometer added 3.45 on Friday and 2.59 last week to 53.02. It remained Neutral.
Disclaimer: Seasonality ratings 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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