Tech Talk for Monday March 30th 2020

U.S. equity index futures were higher this morning. S&P 500 futures were up 19 points in pre-opening trade.

Johnson & Johnson advanced $5.34 to $128.50 after announcing plans to develop a vaccine against COVID-19.

Abbott Labs (ABT $74.56) is expected to open higher after announcing plans to launch a rapid test for COVID-19.

Canada Goose gained $0.30 to $20.52 after Wells Fargo upgraded the stock from Equal Weight to Overweight.

U.S. Steel dipped $0.08 to $5.70 after Deutsche Bank dropped its target price from $8.50 to $4.00.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/03/28/stock-market-outlook-for-march-30-2020/

Note seasonality charts on the TSX Composite relative to the S&P 500 Index.

Technical Scoop

Thank you to David Chapman and www.EnrichedInvesting.com for a link to the following weekly report. Headline reads, "Secular bear, stunning numbers, lurking debt, overheated housing, gold demand, energy disaster". Following is a link:

http://enrichedinvesting.com/wp-content/uploads/2020/03/Secular-bear-stunning-numbers-lurking-debt-overheated-housing-gold-demand-energy-disaster.pdf

The Bottom Line

Equity markets recovered from the "Black Swan event" last week. Equity markets around the world moved sharply higher: The Dow Jones Industrial Average from the close on Monday to the close on Thursday advanced 21.3%, the largest percent gain for a three day period since 1938. However, spread of the coronavirus remains a major influence on equity prices. The VIX Index remained elevated at 66.54%. Look for more volatility this week. World equity markets remain intermediate oversold and show signs of forming a bottoming process.

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 started 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 started to appear. See end of this report for charts.

Most short term short term momentum indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) recovered last week from oversold levels, but most remain below their 20 day moving average.

Short term momentum indicators for Canadian markets and sectors also recovered last week from oversold levels, but remain below their 20 day moving average.

Year-over-year consensus earnings for S&P 500 companies were reduced significantly again last week in recognition of a greater impact from the coronavirus. According to FactSet, first quarter 2020 earnings are expected to drop 5.2% (versus a decline of 2.9% last week) and revenues are expected to increase 2.0% (versus an increase of 2.5% last week). Second quarter 2020 earnings are expected to fall 10.1% (versus a drop of 3.9% last week) and revenues are expected to drop 0.4% (versus an increase of 1.2% last week). Third quarter earnings are expected to fall 1.1% (versus an increase of 3.0% last week) and revenues are expected to increase 2.0% (versus a gain of 3.1% last week). Fourth quarter earnings are expected to increase 4.5% (versus a gain of 7.3% last week) and revenues are expected to increase 3.6% (versus a gain of 4.3% last week). Earnings for all of 2020 are expected to decrease 1.2% (versus a previous gain of 2.5%) and revenues are expected to increase 2.0% (versus a previous gain of 3.2%).

Economic News This Week

January Canadian GDP to be released at 8:30 AM EDT on Tuesday is expected to grow by 0.1% versus a gain of 0.3% in December.

March Chicago PMI to be released at 9:45 AM EDT on Tuesday is expected to drop to 40.0 from 49.0 in February.

March ADP Employment Report to be released at 8:15 AM EDT on Wednesday is expected to drop 150,000 versus a gain of 183,000 in February.

February Construction Spending to be released at 10:00 AM EDT on Wednesday is expected to increase 0.5% versus a gain of 1.8% in January.

March Manufacturing ISM to be released at 10:00 AM EDT on Wednesday is expected to drop to 44.3 from 50.1 in February.

February Canadian Trade Deficit to be released at 8:30 AM EDT on Thursday is expected to slip to $830,000,000 from $1.47 billion in June.

February U.S. Trade Deficit to be released at 8:30 AM EDT on Thursday is expected to slip to $43.00 billion from $45.30 billion in January.

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to slip to 3.000 million from 3.283 million last week.

February Factory Orders to be released at 10:00 AM EDT on Thursday are expected to increase 0.2% versus a drop of 0.5% in January.

March Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected drop 123,000 versus a gain of 273,000 in February. March Unemployment Rate is expected to increase to 3.9 from 3.5% in February. Average Hourly Earnings are expected to increase 0.2% versus a gain of 0.3% in February.

March Services ISM to be released at 10:00 AM EDT on Friday is expected to drop to 45.0 from 57.3 in February

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for March 27th 2020

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Seasonal/Technical Commodities Trends for March 27th 2020

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for March 27th 2020

Green: Increase from previous day

Red: Decrease from previous day

Greg Schnell's Market Buzz

Released on Friday. Headline reads, "What to Buy on the Lows". Following is a link:

https://www.youtube.com/watch?v=zgd2JS6ShWo&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 recovered last week from 1.20 to 1.80. Percent remains deeply oversold and showing early technical signs of bottoming.

Bullish Percent Index for S&P 500 stocks jumped last week from 14.60 to 70.80. The Index already has returned to an intermediate overbought level.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average increased last week from 0.43 to 2.61. Percent remains intermediate oversold and showing early signs of bottoming.

Bullish Percent Index for TSX stocks jumped last week from 13.48 to 54.78. The Index has moved from intermediate oversold to intermediate neutral.

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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