Tech Talk for Monday March 9th 2020

U.S. equity index futures were sharply lower this morning. S&P 500 futures were down 145 points to its daily limit in pre-opening trade before trading was halted. Index futures responded to increasing coronavirus concerns and failure by OPEC and Russia to reach an oil production quota agreement. Saudi Arabia slashed prices for its crude oil and announced intentions to increase production. WTI crude oil plunged $9.75 to $31.53 per barrel. Western Canadian Select plunged $4.16 to $27.88 per barrel.

Equity markets around the world were sharply lower. The Nikkei Average dropped 5.07%. The Australia 200 Index plunged 7.33%. The Shanghai Composite Index gave up 3.01%. The Frankfurt DAX Index lost 6.32%.

The energy sensitive Canadian Dollar plunged 1.25 to U.S. 73.25 cents in response to lower crude oil prices.

The Canadian Dollar was virtually unchanged following release of the February Canadian Housing Starts report. Consensus was a drop from 213,200 to 205,000 units. Actual was 210,000 units.

Cruise Line equity prices are expected to open sharply lower after the U.S. State Department warned passengers not to book cruises due to increased risk of infection.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/03/07/stock-market-outlook-for-march-9-2020/

Note seasonality charts on Non-farm Payrolls and Canadian Employment

Watch Jon Vialoux on BNNBloomberg's Market Call this evening

at 6:00 PM EDT

The Bottom Line

The "Black Swan event" continued last week. Equity markets around the world moved higher by mid-week, but fell sharply by Friday to close with relatively small gains or losses for the week. Spread of the coronavirus was a major factor. The exception was the Shanghai Composite Index with a gain of 5.35%. The VIX Index remained elevated at 42%. Look for more volatility this week.

Observations

Equity markets recovered sharply during the last hour of trading on Friday (again). The Dow Jones Industrial Average gained 600 points, similar to the advance recorded in the previous Friday.

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) were flat/slightly lower last week. Significant signs of a bottom have yet to appear. See end of this report for charts.

Medium term technical indicators for Canadian equity markets also were flat/slightly lower last week. 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 (notably on Friday)

Short term technical indicators for Canadian markets and sectors also moved lower last week(notably on Friday)

Consensus for fourth quarter earnings by S&P 500 companies was virtually unchanged last week: 98% of companies have released quarterly results to date. According to FactSet, blended fourth quarter earnings on a year-over-year basis increased 0.9% and fourth quarter revenues increased 4.0%.

Beyond fourth quarter reports, year-over-year consensus earnings for S&P 500 companies were reduced significantly last week to include a coronavirus impact. First quarter earnings on a year-over-year basis turned negative once again. Thereafter, gains turned positive and accelerated as the year progresses, albeit at a lower rate than indicated last week. According to FactSet, first quarter 2020 earnings are expected to decrease 0.1% (versus an increase of 0.7% last week) and revenues are expected to increase 3.8%. (versus an increase of 4.2% last week). Second quarter 2020 earnings are expected to increase 3.3% (versus 4.6% last week) and revenues are expected to increase 4.1% (versus 4.6% last week). Third quarter earnings are expected to increase 8.4% (versus 9.1% last week) and revenues are expected to increase 5.5% (versus 6.0% last week). Fourth quarter earnings are expected to increase 10.9% (versus 11.4% last week) and revenues are expected to increase 5.8% (versus 6.5% last week). Earnings for all of 2020 are expected to increase 6.7% (versus a previous estimate of 7.4%) and revenues are expected to increase 5.1% (versus previous estimate of 5.0%).

The U.S. Dollar Index and its related ETN virtually collapsed since start of coronavirus fears two weeks ago, down 3.0%.

Economic News This Week

February Canadian Housing Starts to be released at 8:15 AM EDT are expected to slip to 205,000 from 213,200 units in January.

February Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.2% versus a gain of 0.1% in January. Excluding food and energy, February Consumer Price Index is expected to increase 0.2% versus a gain of 0.2% in January.

European Central Bank resets monetary policy at 7:45 AM EDT on Thursday.

February Producer Price Index to be released at 8:30 AM EDT on Thursday is expected to slip 0.1% versus a gain of 0.5% in January. Excluding food and energy, February Producer Price Index is expected to increase 0.2% versus a gain of 0.5% in January.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to slip to 215,000 from 216,000 last week.

March Michigan Consumer Sentiment Index to be released at 10:00 AM EST on Friday is expected to slip to 97.0 from 101.0 in February.

Selected Earnings News This Week

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for March 6th 2020

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for March 6th 2020

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for March 6th 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

Upcoming BNN Appearance

Get your questions ready... Jon Vialoux will be on BNN's Market Call Tonight at 6:00pm ET on Monday, March 9th taking your calls on Technical Analysis and Seasonal Investing.  CALL TOLL-FREE 1-855-326-6266,  EMAIL marketcall@bnnbloomberg.ca,  or TWEET @MarketCall.

Keith Richards' Column

Keith says, "Just another end of the world". Following is a link:

https://www.valuetrend.ca/just-another-ending-of-the-world/

Greg Schnell's "Market Buzz"

Released on Friday. Greg discusses "Testing the lows". Following is a link:

https://www.youtube.com/watch?v=g6hlk3LzL9E&feature=youtu.be

StockTwits released on Friday @EquityClock

Intermediate breakouts/breakdowns:Nil

Editor's Note: 65 S&P 500 stocks moved below short term support levels set on February 28th

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average increased last week from 3.41 as high as 25.00 before dropping to 14.23 on Friday. It remains intermediate oversold, but has yet to show significant signs of bottoming

Bullish Percent Index for S&P 500 stocks slipped last week from 22.20 to 20.20. The Index remains intermediate oversold, but has yet to show signs of bottoming.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average increased from 15.00 to as high as 30.00 on Wednesday followed by a decline to 25.11 on Friday. It remains intermediate oversold, but has yet to show significant signs of bottoming.

Bullish Percent Index for TSX stocks dropped last week from 52.81 to 50.43. It remains intermediate neutral and continues to trend down.

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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