Tech Talk for Monday March 16th 2020
U.S. equity index futures were lower this morning. S&P 500 futures were down the limit of 128.50 points. Index futures responded to rising coronavirus concerns in Europe and North America.
Index futures moved lower despite strong action by the Federal Reserve yesterday. The Fed Fund Rate was slashed 1.00% to 0.00-0.25%.
Consensus for March Empire State Manufacture Survey released at 8:30 AM EDT was a drop to 4.00 from 12.40 in February. Actual was -21.50
WTI crude oil plunged $2.22 to $29.51 in response to a continuing oil production war between Russia and OPEC.
Susquehanna slashed target prices on U.S. oil and gas producers. Target prices were slashed by two thirds or more on Marathon Oil (MRO $4.53), Noble Energy (NBL $7.19), Apache (APA $8.07) and Occidental Petroleum (OXY $14.26).
Apple plunged $32.50 to $245.47 after France issued a $1.3 billion fine against the company over competition concerns.
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2020/03/clip_image0021-3.png "clip_image002[1]")
United Airlines lost $6.64 to $35.00 after Stifel Nicolaus downgraded the stock from Buy to Hold.
EquityClock's Daily Market Comment
Following is a link:
http://www.equityclock.com/2020/03/14/stock-market-outlook-for-march-16-2020/
The Bottom Line
The "Black Swan event" continued last week. Equity markets around the world moved sharply lower. Spread of the coronavirus was a major factor. The VIX Index remained elevated at 58%. Look for more volatility this week. Early signs of a short term bottom appeared in U.S. equity markets on Friday.
Observations
Major U.S. equity indices responded favourably to President Trump's news conference at 3:15 PM EDT on Friday. Dow Jones Industrial Average, S&P 500 Index and NASDAQ Composite gained 9.3% by the close, their largest one day advance since October 2008. The Dow Jones Industrial Average recorded its highest one day point gain in history.
Medium term technical indicators for U.S. equity markets (e.g. Percent of S&P 500 stocks trading above their 50 day moving average, Bullish Percent Index) moved sharply lower last week and are deeply oversold. Early signs of a bottom appeared on Friday. See end of this report for charts.
Medium term technical indicators for Canadian equity markets also moved sharply lower last week and are deeply oversold. Significant signs of a bottom have yet to appear. See end of this report for charts.
Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) moved lower again last week and are deeply oversold
Short term technical indicators for Canadian markets and sectors also moved lower last week and are deeply oversold.
Year-over-year consensus earnings for S&P 500 companies were reduced significantly again last week to include a greater coronavirus impact. According to FactSet, first quarter 2020 earnings are expected to decline 1.2% (versus a decrease of 0.1% last week) and revenues are expected to increase 3.5% (versus an increase of 3.8% last week). Second quarter 2020 earnings are expected to increase 0.9% (versus 3.3% last week) and revenues are expected to increase 3.2% (versus 4.1% last week). Third quarter earnings are expected to increase 6.2% (versus 8.4% last week) and revenues are expected to increase 4.8% (versus 5.5% last week). Fourth quarter earnings are expected to increase 9.3% (versus 10.9% last week) and revenues are expected to increase 5.1% (versus 5.8% last week). Earnings for all of 2020 are expected to increase 5.7% (versus a previous estimate of 6.7%) and revenues are expected to increase 4.5% (versus previous estimate of 5.1%).
Economic News This Week
February Retail Sales to be released at 8:30 AM EDT on Tuesday are expected to increase 0.2% versus a gain of 0.3% in January. Excluding auto sales, February Retail Sales are expected to increase 0.2% versus a gain of 0.3% in January.
February Industrial Production to be released at 9:15 AM EDT on Tuesday is expected to increase 0.4% versus a decline of 0.3% in January. February Capacity Utilization is expected to increase to 77.0 from 76.8 in January.
February Housing Starts to be released at 8:30 AM EDT on Wednesday are expected to slip to 1.502 million units from 1.567 million units in January.
February Canadian Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.2% versus a gain of 0.3% in January.
The Federal Reserve releases its Interest Rate Decision at 2:00 PM EDT on Wednesday. The Fed Fund rate is expected to remain unchanged.
March Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to slip to 10.0 from 36.7 in February.
Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 215,000 from 211,000 last week.
January Canadian Retail Sales to be released at 8:30 AM EDT on Friday are expected to increase 0.3% versus a gain of 1.1% in December. Excluding auto sales, January Retail Sales are expected to increase 0.4% versus a gain of 0.5% in December.
February Existing Home Sales to be released at 10:00 AM EST on Friday are expected to slip to 5.52 million units from 5.46 million units in January.
Selected Earnings News This Week
Trader's Corner
Equity Indices and related ETFs
Daily Seasonal/Technical Equity Trends for March 13th 2020
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for March 13th 2020
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for March 13th 2020
Green: Increase from previous day
Red: Decrease from previous day
Technical Scoop
Thank you to David Chapman and www.enrichedinvesting.com for a link to their weekly report. Headline reads, "Record crash, recovery phase, dominant fear, tradeable rally, swift bear, stalking plague, rising sun"
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
Gold and its related ETN $GLD virtually collapsed in anticipation of Congressional action to offset the coronavirus
S&P 500 Momentum Barometers
Percent of S&P 500 stocks trading above their 50 day moving average dropped last week from 14.23 to 1.00. Percent is deeply oversold
Bullish Percent Index for S&P 500 stocks dropped last week from 20.20 to an all-time low of 1.40 before recovering on Friday to 3.20. Percent is deeply oversold and showing early signs of bottoming.
TSX Momentum Barometers
Percent of TSX stocks trading above their 50 day moving average dropped last week from 25.11 to an all-time low of 0.44. Percent is deeply intermediate oversold.
Bullish Percent Index for TSX stocks plunged last week from 50.43 to 9.13. The Index is deeply intermediate oversold.
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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