Tech Talk for Monday March 23rd 2020

U.S. equity index futures were higher this morning. Equity index futures dropped their regulated limit in overnight trading, but recovered strongly after the Federal Reserve indicated unlimited Quantitative Easing through purchase of U.S. Treasury bonds. S&P 500 futures advanced 32 points in pre-opening trade.

Boeing gained $1.03 to $96.04 after Goldman Sachs upgraded the stock to Buy.

Visa dropped $3.88 to $142.95 after KeyBanc Capital lowered its target price from $220 to $190.

McDonald's fell $4.50 to $143.99 after Deutsche Bank lowered its target price from $199 to $171

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/03/21/stock-market-outlook-for-march-23-2020/

Note seasonality charts on the Consumer Staples sector, the Utilities sector, Existing Home Sales and Canadian Retail Trade.

Technical Scoop

Weekly report compliments of David Chapman and www.enrichedinvesting.com

Headline reads, "Second monster, lifeboat shortage, gold/silver high, widening spread, USD surge, faltering haven, spring sun". Following is a link:

http://enrichedinvesting.com/wp-content/uploads/2020/03/Second-monster-lifeboat-shortage-goldsilver-high-widening-spread-USD-surge-faltering-haven-spring-sun.pdf

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 66.04%, down from a high of 85.47% earlier in the week. Look for more volatility this week. World equity markets are deeply intermediate oversold, but have yet to show significant technical evidence of a bottom.

Observations

The VIX Index (better known as the Fear Index) remains elevated.

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) remain deeply oversold. Significant technical signs of a bottom have yet to appear. See end of this report for charts.

Medium term technical indicators for Canadian equity markets also remain deeply oversold. Significant technical 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) remained low last week and are deeply oversold

Short term technical indicators for Canadian markets and sectors also remained low 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 2.9% (versus a decrease of 1.2% last week) and revenues are expected to increase 2.5% (versus an increase of 3.5% last week). Second quarter 2020 earnings are expected to fall 3.9% (versus a gain of 0.9% last week) and revenues are expected to increase 1.2% (versus 3.2% last week). Third quarter earnings are expected to increase 3.0% (versus 6.2% last week) and revenues are expected to increase 3.1% (versus 4.8% last week). Fourth quarter earnings are expected to increase 7.3% (versus 9.3% last week) and revenues are expected to increase 4.3% (versus 5.1% last week). Earnings for all of 2020 are expected to increase 2.5% (versus a previous estimate of 5.7%) and revenues are expected to increase 3.2% (versus a previous estimate of 4.5%).

Economic News This Week

February New Home Sales to be released at 10:00 AM EDT on Tuesday are expected to decrease 3.1% versus a gain of 7.9% in January.

February Durable Goods Orders to be released at 8:30 AM EDT on Wednesday are expected to decline 0.9% versus a drop of 0.2% in January. Excluding Transportation Orders, February Durable Goods Orders are expected to drop 0.4% versus a gain of 0.8% in January.

Next estimate of fourth quarter real GDP to be released at 8:30 AM EDT on Thursday is expected to remain unchanged from the third quarter at 2.1%.

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to jump to 560,000 from 281,000 last week.

February Personal Income to be released at 8:30 AM EDT on Friday is expected to increase 0.4% versus a 0.6% increase in January. February Personal Spending is expected to increase 0.2% versus a 0.2% gain in January.

March Michigan Consumer Sentiment Index to be released at 10:00 AM EDT on Friday is expected to slip to 89.5 from 95.9 in February.

Selected Earnings News This Week

Quarterly reports released by major U.S. and Canadian companies are sparse this week. Four S&P 500 companies and one Dow Jones Industrial company are scheduled to report.

Trader's Corner

Equity Indices and related ETFs

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Seasonal/Technical Commodities Trends for March 20th 2020

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for March 20th 2020

Green: Increase from previous day

Red: Decrease from previous day

StockTwits released on Friday @EquityClock

Nil

Greg Schnell's "Market Buzz"

Released on Friday. Greg discusses, " 4 stops are not a start". Following is a link:

https://www.youtube.com/watch?v=D2w18Rc-hCg&feature=youtu.be

Larry Williams's Video

Interesting history on U.S. stock market panics during the past 50 years! Larry claims to be "bullish at a time of extreme panic". The video implies that U.S. equity markets are close to an important bottom. Following is a link:

https://www.youtube.com/watch?v=ztk3Ti-4yO4&feature=youtu.be

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

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average inched up from 1.00 to 1.20 last week. Percent is deeply oversold, but has yet to show significant signs of bottoming.

Bullish Percent Index for S&P 500 stocks increased last week from 3.20 to 14.60. The Index remains deeply oversold and shows early signs of bottoming.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average was unchanged last week at 0.43. Percent remains deeply oversold, but has yet to show significant technical signs of bottoming.

Bullish Percent Index for TSX stocks improved last week from 9.13 to 13.48. The Index remains deeply oversold and shows early signs of bottoming.

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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