Tech Talk for Monday November 12th 2018

U.S. equity index futures were lower this morning. S&P 500 futures were down 7 points in pre-opening trade.

Altria (MO $63.42) is expected to open lower following a Wall Street Journal report that the FDA plans to propose a ban on menthol cigarettes.

L Brands added $1.10 to $37.60 after Wells Fargo upgraded the stock to Outperform from Market Perform. Target was raised to $55 from $30.

Yelp ((YELP $31.93) is expected to open lower after SunTrust downgraded the stock to Hold from Buy. Target price was dropped to $35 from $51.

Apple (AAPL $204.47) is expected to open lower after JP Morgan lowered its target price to $266 from $270.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/11/09/stock-market-outlook-for-november-12-2018/

Note seasonality charts on the Technology sector, Wholesale Sales and Wholesale Inventories

WALL STREET RAW RADIO

SATURDAY, NOVEMBER 10, 2018

WITH YOUR HOST, MARK LEIBOVT.

GUESTS INCLUDE: DON VIALOUX, HENRY WEINGARTEN, HARRY BOXER, AND SINCLAIR NOE.

https://tinyurl.com/ycev29j4

Excerpts from Wall Street Raw by Don Vialoux

U.S. equity markets continued to move higher last week as part of their seasonal advance from late October to the first week in January. The S&P 500 Index from its low on October 29th advanced more than 6.5% and the Dow Jones Industrial Average gained more than 7.5%. Strength was notable after the U.S. Midterm election when concerns about a Democrat control of the House and Senate were relieved.

Cannabis stocks also responded favourably to Midterm election results on good news. Michigan voters approved the recreational use of cannabis and several states approved the medical use of cannabis. The Cannabis ETF in Canada (HMMJ) advanced about 3%.

Focus next week is on the seasonally favoured U.S. retail sector. Consumers are opening their wallets wider than usual this Christmas. Lots of news from the sector is to be announced this week: October Retail Sales to be released on Thursday are expected to increase 0.4% from September. In addition, major retailers are scheduled to release fiscal third quarter results including Wal-Mart, JC Penney, Nordstrom, Macy's and Gap Stores. Technical action in the sector recently has been positive. Kohl's broke to an all-time high last Thursday.

The Bottom Line

Favourable seasonal influences from October to the first week in January for major U.S. equity indices continued to surface last week (This year the traditional start was delayed by two weeks to October 29th ). Seasonality charts for the S&P 500 Index and Dow Jones Industrial Average are offered below.

Seasonal influences normally are most notable during U.S. Mid-term election years (although start of the favourable period was delayed this year to the end of October). Investors were concerned about a possible change in political control in Congress. Their concerns were very real this year. Pollsters were calling for a "Blue wave" with control taken by the Democrats over both the House and the Senate. Instead, it proved to be a "Blue trickle". Democrats regained control of the House, but failed to gain control of the Senate. Historically, split control of Congress has been positive for U.S. markets because Congress is less likely to interfere in economic growth

Favourable seasonal influences also continued to surface for Canadian equities last week. The TSX Composite Index has closely followed its seasonal pattern this year. Performance of the TSX Composite Index normally is negative from the third week in July to mid-October followed by start of period of seasonal strength. This year, the seasonal upturn began on October 29th

North American equity markets recovered strongly last week with extraordinary gains despite weakness on Friday. Preferred strategy now is to add to seasonally favoured equity securities on weakness for a seasonal trade that could last to the first week in January.

Economic News This Week

October U.S. Consumer Price Index to be released at 8:30 AM EST on Wednesday is expected to increase 0.3% versus a gain of 0.1% in September. Excluding food and energy, October Consumer Price Index is expected to increase 0.2% versus a gain of 0.1% in September.

Federal Reserve Chairman Jerome Powel speaks at 6:05 PM EST on Wednesday

October Retail Sales to be released at 8:30 AM EST on Thursday are expected to increase 0.4% versus a gain of 0.1% in September. Excluding October auto sales Retail Sales are expected to increase 0.5% versus a decline of 0.1% in September.

November Philly Fed Index to be released at 8:30 AM EST on Thursday is expected to slip to 20.9 from 22.2 in October.

November Empire State Manufacturing Survey to be released at 8:30 AM EST on Thursday is expected to slip to 20.5 from 21.1 in October.

October Capacity Utilization to be released at 9:15 AM EST on Friday is expected to remain unchanged from September at 78.1. October Industrial Production is expected to increase 0.2% versus a gain of 0.3% in September.

Earnings News This Week

Observations

Third quarter reports by S&P 500 companies are winding down. Ninety percent of companies have reported to date. Most companies beat consensus earnings per share (78%) and sales (61%) estimates. Another 15 S&P 500 companies are scheduled to release results this week (including 3 Dow Jones Industrial company: Home Depot, Wal-Mart, Cisco).

Technical action by individual S&P 500 stocks was bullish last week. Number of stocks breaking intermediate resistance totaled 51 while number of stocks breaking support totaled 9. The Up/Down ratio increased last week to(120/332 =) 0.36 from 0.27.

U.S. economic focuses this week are October retail sales to be released on Thursday and October CPI to be released on Wednesday.

Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) continue to move higher last week. See charts near the end of this report

Medium term technical indicators in Canada also continued to move higher last week. 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) continued to trend higher, but are short term overbought.

Short term technical indicators for Canadian markets and sectors also continued to trend higher last week, but also are short term overbought.

Short term political concerns remain elevated. Issues include heightened tariff wars with China and the Mueller investigation.

Longer term outlook for earnings and sales by S&P 500 companies remains positive and improving. According to FactSet, consensus calls for a 25.2% increase in earnings in the third quarter on a year-over-year basis (up from 24.9% last week) and a 9.4% increase in sales in the third quarter (up from 8.5% last week). Consensus calls for a 14.2% increase in earnings and 6.7% increase in sales in the fourth quarter. Consensus calls for a 20.6% increase in earnings and an 8.9% increase in sales for 2018. Consensus calls for a 5.6% increase in earnings and 6.6% in sales in the first quarter 2019. Consensus calls for a 6.2% increase in earnings and 5.3% in sales in the second quarter 2019. Consensus for 2019 calls for a 9.2% increase in earnings and a 5.3% increase in sales.

Major U.S. companies are looking for places to invest their new found cash flow. Look for anticipation of news about share buybacks, increased dividends, take overs, employee bonuses and wage increases prior to release of fourth quarter results. In other words, "Santa Claus is coming to town".

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for November 9th 2018

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for November 9th 2018

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for November 9th 2018

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

Telus $T.CA, a TSX 60 stock moved above $45.98 setting an intermediate uptrend.

Crescent Point Energy $CPG.CA moved below $5.66 extending an intermediate downtrend.

Technical action by S&P 500 stocks to 10:00: Quiet. Intermediate breakouts: $SJM $VRSK. Breakdown: $PCG

Editor's Note: After 10:00 AM EST, breakouts included EXC, LNT, AEE, MDLZ, DTE and FISV. Breakdown: KMX, EIX.

TMX Group $X.CA moved below $78.01 extending an intermediate downtrend.

Couche Tard $ATD.B.CA moved above $66.74 extending an intermediate uptrend.

Equity Clock?EUR? @EquityClock Nov 6

Winter, Spring, Summer, and Fall – We cover them all in the Seasonal Advantage Portfolio. http://www.equityclock.com/About/Seasonal

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 46.20 from 25.60. Percent changed from Intermediate Oversold to Intermediate Neutral and continues to trend higher.

Bullish Percent Index for S&P 500 stocks increased last week to 50.40 from 42.00. The Index remains Intermediate Neutral and trending higher.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average increased last week to 32.92 from 20.83. Percent remains intermediate oversold and trending higher.

Bullish Percent Index inched up last week to 43.44 from 43.03. The Index remains Intermediate Neutral and trending up.

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

Sponsored By...