Tech Talk for Monday March 14th 2022
U.S. equity index futures were higher this morning. S&P 500 futures were up 14 points in pre-opening trade. Index futures responded to a drop in crude oil prices. WTI crude oil fell $4.41 to $104.89 in pre-opening trade.
Loblaw Companies' Shoppers Drug (L Cdn$114.38) subsidiary announced purchase of Lifemark Health Group for Cdn$845 million.
FedEx slipped $6.03 to $213.08 after KeyBanc Capital lowered its target price from $325 to $300.
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2022/03/clip_image0021-7.png "clip_image002[1]")
Apple dropped $3.79 to $154.73 after China closed down manufacturing operations of its supplier, Foxconn in Shenzhen due to a COVID 19 breakout.
Rio Tinto slipped $0.58 to $ 111.12 after offering to buy remaining outstanding shares of Turquoise Hill for $2.7 billion.
![clip_image004[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2022/03/clip_image0041-5.png "clip_image004[1]")
EquityClock's Daily Comment
Following is a link:
http://www.equityclock.com/2022/03/12/stock-market-outlook-for-march-14-2022/
Weekly Technical Scoop
From David Chapman from and www.EnrichedInvesting.com
The Bottom Line
Most world equity markets have been in a corrective phase since the beginning of January in response to two events:
- Geopolitical events in Europe (mainly Ukraine)
- Anticipation of higher interest rates by central banks in order to cool rising inflation rates.
Investors have responded in two ways since the beginning of January:
- By owning defensive (i.e. risk off) equity positions such as Utilities and Consumer Staples (e.g. Canadian food retailing stocks)
- By owning commodity sensitive equities (e.g. base metals stocks, gold stocks, agribusiness stocks). Many have 'gone parabolic" during the past month.
Most world equity markets currently are intermediate Oversold, but have yet to show technical signs of a bottom. The exceptions are equity markets in commodity sensitive countries (e.g. Canada, Australia and Brazil). These markets significantly have outperformed other world equity markets.
Short term events, that could change direction of world equity markets in the short term, include:
- Final solution with Ukraine
- Full anticipation of an increase in U.S. interest rates by the Federal Reserve next Wednesday that will include a schedule for future interest rate increases.
If and when these events are resolved during the next few weeks, the stage will be set for a typical rally in equity markets into spring and possibly into early summer. Investment preferences will turn from"risk off" to" risk on". Best selections during the "risk on" period include technology, industrial and consumer discretionary equities and Exchange Traded Funds.
Seasonal influences during the past 20 years for the S&P 500 Index, the TSX Composite Index and "risk on" sectors have turned positive on average on March 15th. Seasonal strength lasts until at least early May and frequently into July.
Patience for a Spring entry point into U.S. equity markets is preferred for now with the understanding that a recovery rally from oversold levels is likely to occur during the next few weeks. Short term technical indicators will help to fine tune an entry points for an important trading opportunity coming this spring.
The TSX Composite Index also is expected to benefit from a recovery rally in U.S. equity markets. However, U.S. equity indices historically have outperformed Canadian equity indices during the Spring rally period into July. The TSX Composite Index currently is Overbought relative to the S&P 500 Index.
Observations
Consensus earnings estimates for S&P 500 companies on a year-over-year basis in the first quarter of 2022 were increased slightly: 65 companies have issued negative guidance to date and 29 companies have issued positive guidance. According to www.FactSet.com first quarter earnings on a year-over-year basis are expected to increase 4.8% and revenues are expected to increase 10.7% (versus 10.4% last week).
Consensus estimates for S&P 500 companies beyond the first quarter on a year-over-year basis increased slightly. According to www.FactSet.com second quarter earnings are expected to increase 5.2% (versus 4.7% last week) and revenues are expected to increase 9.5% (versus 8.7% last week). Earnings on a year-over-year basis for all of 2022 are expected to increase 9.1% (versus 8.6% last week) and revenues are expected to increase 8.9% (versus 8.4% last week).
Economic News This Week
February Producer Price Index to be released at 8:30 AM EDT is expected to increase 0.9% versus a gain of 1.0% in January (Year-over-year 10.0% versus 9.7% in January). Excluding food and energy, February Producer Price Index is expected to increase 0.6% versus a gain of 0.8% in January (Year-over-year 8.7% versus 8.3% in January).
March Empire State Manufacturing Survey to be released at 8:30 AM EDT on Tuesday is expected to increase to 7.25 from 3.10 in February.
February Retail Sales to be released at 8:30 AM EDT on Wednesday are expected to increase 0.4% versus a gain of 3.8% in January. Excluding auto sales, February Retail Sales are expected to increase 1.0% versus a gain of 3.3% in January.
February Canadian Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.9% versus a gain of 0.9% in January (Year-over-year 5.5% versus 5.1% in January).
January Business Inventories to be released at 10:00 AM EDT on Wednesday are expected to increase 1.1% versus a gain of 2.1% in December.
FOMC Statement on Interest Rates is released at 2:00 PM EDT. Fed Fund rate is expected to increase from 0.25% to 0.50%. Press conference with Chairman Powell is scheduled at 2:30 AM EDT.
February Housing Starts to be released at 8:30 AM EDT on Thursday are expected to increase to 1.683 million units from 1.638 million units.
March Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to slip to 15.0 from 16.0 in February
February Capacity Utilization to be released at 9:15 AM EDT on Thursday is expected to increase to 77.8% from 77.6% in January. February Industrial Production is expected to increase 0.5% versus a gain of 1.4% in January.
Canadian January Retail Sales to be released at8:30 AM EDT on Friday are expected to increase 2.4% versus a drop of 1.8% in December. Excluding auto sales, Canadian January Retail Sales are expected to decline 2.0% versus a drop of 2.5% in December
February Existing Home Sales to be released at 10:00 AM EDT on Friday are expected to slip to 6.16 million units from 6.50 million units in January.
February Leading Economic Indicators to be released at 10:00 AM EDT on Friday is expected to increase 0.3% versus a decline of 0.3% in January.
Selected Earnings News This Week
Trader's Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for March 11th 2022
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for March 11th 2022
Green: Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for March 11th 2021
Green: Increase from previous day
Red: Decrease from previous day
All seasonality ratings are based on performance relative to the S&P 500 Index (except TSX)
Links offered by valued providers
Greg Schnell, the Canadian Technician says "Gas prices have topped this week".
Gas Prices Have Topped This Week | The Canadian Technician | StockCharts.com
Mark Leibovit discusses volatile markets and daily profits
Volatile Markets and Daily Profits - HoweStreet
Links from Mark Bunting and www.uncommonsenseinvestor.com
"These Risk Moments Are Opportunities" – Uncommon Sense Investor
McCullough: We're In One of the Biggest Market Collapses of the Modern (hedgeye.com)
Volatility Happening All at Once After Starting Slowly – Uncommon Sense Investor
David Rosenberg: Defensives over cyclicals as the knife falls on earnings estimates | Financial Post
Concerns About Rate Hikes Overdone | Morningstar
Michael Campbell's Money Talks for March 12th
March 12th Episode (mikesmoneytalks.ca)
Weekly Technical Scoop from David Chapman and www.Enrichedinvesting.com
.....
Josef Schachter asks "How long can sky high oil prices last'?
How Long Can Sky High Oil Prices Last? - HoweStreet
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 released on Friday at
Travelers $TRV a Dow Jones Industrial Average stock moved above $173.64 to an all-time high extending an intermediate uptrend.
Vietnam ETF $VNM moved below $18.85 extending an intermediate downtrend.
Transportation stocks outperforming the market despite high energy commodity prices, but we only have one industry group that is on our list of segments to accumulate. equityclock.com/2022/03/10/… $DJT $IYT $CNI $UNP $NSC $CP $CSX
Baidu $BIDU a NASDAQ 100 stock moved below $132.14 extending an intermediate downtrend.
Abbott Labs $ABT an S&P 100 stock moved below $114.43 extending an intermediate downtrend.
Adobe $ADBE a NASDAQ 100 stock moved below $416.81 extending an intermediate downtrend.
Cdn. REIT iShares $XRE.CA moved above $20.98 to an all-time high extending an intermediate uptrend.
S&P 500 Momentum Barometers
The intermediate term Barometer dropped 3.21 on Friday and 9.22 last week to 26.25. It remains Oversold, but has yet to show signs of bottoming.
The long term Barometer dropped 2.61 on Friday and 7.82 last week to 37.07. It changed from Neutral to Oversold on a move below 40.00. Trend remains down and has yet to show signs of bottoming.
TSX Momentum Barometers
The intermediate term Barometer eased 3.07 on Friday and 0.18 last week to 58.77. It remains Neutral.
The long term Barometer slipped 1.32 on Friday, but gained 2.37 last week to 61.84. It changed from Neutral to Overbought on a move above 60.00.
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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