Tech Talk for Monday June 8th 2020

U.S. equity index futures were higher this morning. S&P 500 futures were up 21 points in pre-opening trade.

The Canadian Dollar added 0.10 to US74.64 cents following release of May Canadian Housing Starts at 8:15 AM EDT. Consensus was a drop to 153,000 units from 166,500 units in April. Actual was an increase to 193,500 units.

International Flavours and Fragrances slipped $0.48 to $137.38 after a 7% reduction in revenues during April and May.

Brookfield Asset Management added $0.63 to US$36.89 after JP Morgan started coverage with an Overweight rating.

Chevron gained $3.39 to $104.20 after JP Morgan raised its target price from $103 to $109.

Amazon.com added $14.00 to $2497.00 after RBC Capital raised its target price to $3,300.00.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/06/06/stock-market-outlook-for-june-8-2020/

Note seasonality charts on U.S. Non-farm Payrolls and Canadian Employment

The Bottom Line

Equity markets around the world moved higher again last week. North American equity markets are now extremely intermediate overbought. Spread of the coronavirus and possibility of a vaccine before the end of the year continue to be major influences on equity prices. The VIX Index remains elevated, typical for North American equity markets between May and October.

Observations

The VIX Index (better known as the Fear Index) continues to trend lower, but remained well above its normal 12%-22% range.

Medium term technical indicators for U.S. equity markets (e.g. Percent of S&P 500 stocks trading above their 50 day moving average) remained intermediate overbought. See Barometer chart at the end of this report.

Medium term technical indicators for Canadian equity markets remained intermediate overbought last week. See Barometer chart at the end of this report.

Most short term short term momentum indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) remained high last week, but have yet to show signs of peaking

Short term momentum indicators for Canadian markets and sectors also remained high last week, but have yet to show signs of peaking.

Year-over-year consensus earnings for S&P 500 companies were reduced slightly again last week. According to FactSet, second quarter 2020 earnings are expected to fall 43.3% (versus a drop of 43.1% last week) and revenues are expected to drop 11.5%. Third quarter earnings are expected to fall 25.1% (versus a fall of 24.9% last week) and revenues are expected to decrease 5.8% (versus 5.7% last week). Fourth quarter earnings are expected to decrease 12.6% (versus a decrease of 12.5% last week) and revenues are expected to decline 1.4%. Earnings for all of 2020 are expected to decrease 21.3% (versus 21.1% last week) and revenues are expected to decrease 4.0%. Earnings for all of 2021 are expected to increase 28.1% (versus 28.8 last week) and revenues are expected to increase 8.6%.

Economic News This Week

May Canadian Housing Starts to be released at 8:15 AM EDT on Monday are expected to drop to 110, 000 units from 166,400 units in April.

OPEC Meeting is held on Tuesday and Wednesday.

U.S. May Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to slip 0.1% versus a drop of 0.8% in April. Excluding food and energy, May Consumer Price Index slipped 0.1% versus a drop of 0.4% in April.

FOMC statement on interest rates is expected to be released at 2:00 PM EDT on Wednesday followed by a press conference at 2:30 PM EDT. No change in the Fed Fund Rate at 0.25% is expected.

U.S. May Producer Price Index to be released at 8:30 AM EDT on Thursday is expected to increase 0.1% versus a drop of 1.3% in April. Excluding food and energy, May Producer Price Index is expected to slip 0.1% versus a drop of 0.3% in April.

June Michigan Consumer Sentiment Index to be released at 10:00 AM EDT on Friday is expected to improve to 74.8 from 72.3 in May.

Selected Earnings News This Week

Reports from major U.S. and Canadian companies are sparse this week.

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for June 5th 2020

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Seasonal/Technical Commodities Trends for June 5th 2020

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for June 5th 2020

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

Technical Notes

The NASDAQ Composite Index (COMPQ) moved above 9,838.37 to an all-time high extending an intermediate uptrend.

Hong Kong iShares (EWH) moved above $21.76 setting an intermediate uptrend.

Medical Devices iShares (IHI) moved above $268.82 extending an intermediate uptrend.

Apple (AAPL), a Dow Jones Industrial stock moved above $326.34 to an all-time high extending an intermediate uptrend.

Walmart (WMT), a Dow Jones Industrial stock moved below $120.25 setting an intermediate downtrend.

Berkshire Hathaway (BRK.B), an S&P 100 stock moved above $197.23 completing a double bottom pattern.

General Electric (GE), an S&P 100 stock moved above $8.30 completing a double bottom pattern.

Occidental Petroleum (OXY), an S&P 100 stock moved above $18.27 completing a double bottom pattern.

United Airlines (UAL), an S&P 100 stock moved above $39.78 completing a double bottom pattern.

Broadcom (AVGO), a NASDAQ 100 stock moved above $326.04 to an all-time high extending an intermediate uptrend.

Allstate (ALL), an S&P 100 stock moved above $106.15 setting an intermediate uptrend.

Mylan (MYL), a NASDAQ 100 stock moved above $17.85 extending an intermediate uptrend.

Ross Stores (ROST), a NASDAQ 100 stock moved above $101.08 extending an intermediate uptrend.

Check Point (CHKP), a NASDAQ 100 stock moved above $110.98 extending an intermediate uptrend.

Liberty Global (LBTYK), a NASDAQ 1`00 stock moved above $22.68 extending an intermediate uptrend.

Western Digital (WDC), a NASDAQ 100 stock moved above $48.83 extending an intermediate uptrend

Incyte (INCY), a NASDAQ 100 stock moved below $93.22 setting an intermediate downtrend.

Bank of Montreal (BMO), a TSX 60 stock moved above $76.23 completing a double bottom pattern.

BCE (BCE), a TSX 60 stock moved above $59.31 setting an intermediate uptrend

Suncor (SU), a TSX 60 stock moved above $26.87 setting an intermediate uptrend.

Brookfield Infrastructure (BIP/UN), a TSX 60 stock moved above $59.28 extending an intermediate uptrend

First Quantum Minerals (FM), a TSX 60 stock moved above $9.58 extending an intermediate uptrend.

Gildan Activewear (GIL), a TSX 60 stock moved above $23.49 setting an intermediate uptrend.

CGI Group (GIB.A), a TSX 60 stock moved above Cdn.$91.94 setting an intermediate uptrend

Husky Energy (HSE), a TSX 60 stock moved above $5.09 setting an intermediate uptrend.

S&P 500 Momentum Barometer

The Barometer added 0.62 to 95.99 on Friday. It remains extremely intermediate overbought, but has yet to show signs of peaking.

TSX Momentum Barometer

The Barometer was unchanged on Friday at 90.58. It remains extremely intermediate overbought, but has yet to show signs of peaking.

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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