Tech Talk for Monday May 13th 2019

U.S. equity index futures moved lower this morning. S&P 500 futures were down 55 points in pre-opening trade. Index futures responded to a stalemate on trade between the U.S. and China. The Shanghai Composite lost another 1.21% to 2903.71.

Crude oil gained $0.78 to $62.44 after two Saudi oil tankers were attacked near the Strait of Hormuz.

Prudential Financial (PRU $101.27) is expected to open lower after the stock was downgraded to Neutral from Buy.

FedEx (FDX $178.00) and UPS (UPS $100.63) are expected to open lower after Amazon announced expansion of its Delivery Service Partners Program

WestJet (WJA $18.52) is expected to open higher after Onex offered to buy the company at $31 per share. Value of the offer is estimated at $5 billion.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/05/11/stock-market-outlook-for-may-13-2019/

Note seasonality chart on Canadian Employment

Jon Vialoux on BNN Bloomberg on Friday

Following are links:

Market Outlook

https://www.bnnbloomberg.ca/video/jon-vialoux-s-market-outlook~1681215

Past Picks

https://www.bnnbloomberg.ca/video/jon-vialoux-s-past-picks~1681270

Top Picks

https://www.bnnbloomberg.ca/video/jon-vialoux-s-top-picks~1681271

Update on the Seasonal Advantage Fund

As noted in Jon's comments on BNNBloomberg on Friday, major changes were made to the Fund on May 2nd. Previously, the Fund was fully invested with a focus on higher than average beta equities (e.g. Industrials, Materials, Technology, Emerging Markets). After May 2nd the portfolio shifted to cash (25%), bonds equivalents (25%) and equities with lower than average beta (including Health Care and Consumer Staples). Net result: the Fund avoided most of the downdraft experienced by North American equity markets last week.

The Bottom Line

U.S. equity markets moved significantly lower last week despite better than consensus first quarter results released by S&P 500 and Dow Jones Industrial companies. The TSX Composite Index also weakened. Most equity markets around the world passed their seasonal peak.

Observations

Technical action by individual S&P 500 stocks was bearish last week. Number of stocks breaking intermediate resistance totaled 6 while number of stocks breaking support totaled 50. Breakdowns were most notable in the Energy, Industrial, Technology and Utilities sectors. The Up/Down ratio dropped to (277/130=) 2.13 from 2.86.

Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) continued to move lower last week. They are intermediate neutral and trending down. See charts near the end of this report

Medium term technical indicators in Canada continued to move lower last week. They remain intermediate neutral and are trending down. See charts near the end of this report.

Short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum) deteriorated again last week.

Short term technical indicators for Canadian markets and sectors also deteriorated again last week.

Short term political concerns in the U.S. remain elevated. Issues include tariff wars between the U.S. and China and anti-Trump hearings initiated by the Democrat controlled House of Representatives. Release of the Mueller report continues to elevate political rhetoric.

Frequency of S&P 500 first quarter earnings reports are winding down while frequency of first quarter reports by TSX listed companies is peaking. Another 9 S&P 500 companies (including two Dow Jones Industrial company: Cisco and Wal-Mart) are scheduled to report this week. To date, 90% of S&P 500 companies have reported quarterly results.

Prospects for S&P 500 earnings in the first quarter improved again last week thanks.to higher than consensus results released to date. However, estimates beyond the first quarter moved slightly lower again. According to FactSet, first quarter earnings are expected to decline 0.5% on a year-over-year basis (versus a decline of 0.8% last week) but revenues are expected to increase 5.3% (up from 5.2% last week). Second quarter earnings are expected to drop 1.7% (versus a drop of 1.3% last week) and second quarter revenues are expected to increase 4.3%. Sixty five companies issued negative second quarter guidance (versus 56 last week) and 17 companies issued positive guidance (versus 14 last week). Third quarter earnings are expected to increase 0.6% (versus 0.8% last week) and revenues are expected to increase 4.3% (versus 4.4% last week). Fourth quarter earnings are expected to increase 7.4% (versus 7.5% last week) and fourth quarter revenues are expected to increase 4.6% (versus 4.8% last week). For all of 2019, earnings are expected to increase 3.3% (versus 3.4% last week) and revenues are expected to increase 4.7%.

Seasonal influences for most world equity markets reached a seasonal peak on schedule in the first week in May this year.

Economic News This Week

April Retail Sales to be released at 8:30 AM EDT on Wednesday are expected to increase 0.3% versus a gain of 1.6% in March. Excluding auto sales, April Retail Sales are expected to increase 0.7% versus a gain of 1.2% in March.

May Empire State Manufacturing Survey to be released at 8:30 AM EDT on Tuesday is expected to increase to 10.50 from 10.10 in April.

April Canadian Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.4% versus a gain of 0.7% in March.

April Capacity Utilization to be released at 9:15 AM EDT on Wednesday is expected to remain unchanged from March at 78.8%. April Industrial Production is expected to increase 0.1% versus a decline of 0.1% in March.

March Business Inventories to be released at 10:00 AM EDT on Wednesday are expected to increase 0.2% versus a gain of 0.3% in February.

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to drop to 223,000 from 228,000 last week.

April Housing Starts to be released at 8:30 AM EDT on Thursday are expected to increase 8.0% versus a decline of 0.3% in March.

May Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to increase to 9.5 from 8.5 in April.

May Consumer Sentiment to be released at 10:00 AM EDT on Friday is expected to increase to 97.5 from 97.2 in April.

Earnings News This Week

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for May 10th 2019

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for May 10th 2019

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for May 10th 2019

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

StockTwits released on Friday @EquityClock

Technical action by S&P 500 stocks to 10:00: Quietly bearish. No intermediate breakouts. Breakdowns: $SYMC $CNP $GPS.

TMX Group $X.CA moved above $89.00 to an all-time high extending an intermediate uptrend.

#Employment in Canada up 187,700 (NSA) in April, or 1.0%, stronger than average increase for this time of year of 0.7%. $MACRO #CDNecon #CAD

Blackberry $BB.CA, a TSX 60 stock moved below support at $11.58

Corn ETN $CORN moved below $14.64 extending an intermediate downtrend.

Technical action by S&P 500 stocks from 10:00 to 12:00: Bearish. No breakouts. Breakdowns: $MTD $ROK $UHS $EXPE $LKQ $ORLY $FTV $EXPD $HPQ $WDC $ATVI

Editor's Note: After 12:00 Noon, No additional breakdowns. Breakouts included AFL, AMT, MAA and MMC when U.S. equity indices recovered to the close.

Natural Gas ETN $UNG moved above $22.73 setting a short term uptrend. ‘Tis the season for strength to mid-June!

US Consumer Price Index (#CPI) up 0.5% (NSA) in April, stronger than the average increase for this time of year of 0.4%. $MACRO #Economy #Inflation

Don Vialoux comment in www.globeinvestor.com on Friday

A comment on Natural Gas prices

Following is a link:

https://www.theglobeandmail.com/investing/markets/etfs/article-its-the-season-to-take-advantage-of-natural-gas-prices-heres-how/

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average dropped last week to 56.60 from 67.40. Percent changed from intermediate overbought to intermediate neutral on a move below 60 and is trending down.

Bullish Percent Index for S&P 500 stocks dropped last week to 65.60 from 73.20. The Index is intermediate overbought and trending down.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average dropped last week to 43.28 from 46.19. Percent remains intermediate neutral and trending down.

Bullish Percent Index for TSX stocks dropped last week to 57.85 from 60.74. The Index changed to intermediate neutral from intermediate overbought on a move below 60 and is trending 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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