Tech Talk for Monday November 20th 2023
U.S. equity index futures were lower this morning. S&P 500 futures were down 3 points at 8:30 AM EST.
Microsoft added $6.25 to $376.10 after hiring Sam Altman, former OpenAI chief executive officer.
![clip_image001[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/11/clip_image0015-2.png "clip_image001[5]")
Boeing advanced $2.79 to $210.80 after Deutsche Bank upgraded the stock from Hold to
Buy and raised its target price from $204 to $270.
![clip_image002[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/11/clip_image0025-2.png "clip_image002[5]")
Franco-Nevada (FNV.TO Cdn$165.16) is expected to open lower after the company scaled back guidance.
Krispy Kreme dropped $0.32 to $12.72 after JP Morgan downgraded the stock from Overweight to Neutral.
![clip_image004[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/11/clip_image0045-1.png "clip_image004[5]")
EquityClock's Daily Comment
Headline reads "It is no surprise that the rally in stocks has coincided with the largest expansion of net assets on the Fed's balance sheet since March".
https://equityclock.com/2023/11/18/stock-market-outlook-for-november-20-2023/
Technical Scoop
from David Chapman and www.EnrichedInvesting.com
The Bottom Line
The yearend rally from late October to the first week in January for North American equity indices continues. Historically, as part of the yearend rally, North American equity markets have moved higher from just before U.S. Thanksgiving holiday (November 23rd this year) to the first trading day in December.
The Thanksgiving rally is attributed to start of the Christmas gift buying season. "Black Friday", the day after Thanksgiving, is notorious for its surge in retail sales. Not surprising, Retail SPDRs (Symbol: XRT) are following their historic pattern for this time of year by moving sharply higher just before "Black Friday". Encouraging comments on the season offered by Gap Inc on Friday set the tone.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.FactSet.com
Consensus earnings estimates for the third quarter of 2023 increased again last week. Ninety four percent of companies in the Index have reported to date. Consensus for the third quarter on a year-over-year basis is an earnings increase of 4.3% (versus an increase last week of 4.1%). Third quarter revenues are expected to increase 2.4% (versus an increase last week of 2.3%)
Estimates for the fourth quarter were lowered again. Fourth quarter earnings are expected to increase 2.9% (versus previous increase of 3.2%). Fourth quarter revenues are expected to increase 3.2% (versus previous increase of 3.3%). For all of 2023, consensus calls for an earnings increase of 0.6%. Revenues are expected to increase 2.3%.
The recovery continues into 2024, but at a declining rate from last week. Consensus for the first quarter on a year-over-year basis calls for an earnings increase of 6.5 % (versus previous increase of 6.7%) and a revenue increase of 4.2% (versus previous increase of 4.3%). Consensus for the second quarter calls for a 10.4% earnings increase (versus previous increase of 10.5%) and a 5.0% increase in revenues. Consensus for all of 2024 is an increase in earnings of 11.6% and a 5.4% increase in revenues (versus previous increase of 5.5%.
Economic News This Week
Source: www.Investing.com
October U.S. Leading Economic Indicators released at 10:30 AM EST on Monday are expected to drop 0.7% versus a drop of 0.7% in September.
Canadian October Consumer Price Index is released at 8:30 AM EST on Tuesday
October Existing Home Sales released at10:00 AM EST on Tuesday are expected to slip to 3.93 million units from 3.96 million units in September
FOMC Meeting Minutes are released at 2:00 PM EST.
October Durable Goods Orders released at 8:30 AM EST on Wednesday are expected to drop 3.0% versus a gain of 4.7% in September.
November Michigan Consumer Sentiment released at 10:00 AM EST on Wednesday is expected to drop to 60.4 from 63.8 in October.
Bank of Canada's Tiff Macklem speaks at 11:45 AM ESTon Wednesday
Canadian September Retail Sales are released at 8:30 AM EST on Friday.
Selected Earnings News This Week
Source: www.Investing.com
Eleven S&P 500 companies are scheduled to release quarterly results this week. Focuses are on NVidia on Tuesday and Deere on Wednesday. No TSX 60 companies are scheduled to release this week.
Trader's Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for Nov17th 2023
Green: Increase from previous day
Red: Decrease from previous day
Source for all positive seasonality ratings: www.EquityClock.com
Commodities
Daily Seasonal/Technical Commodities Trends for Nov.17th 2023
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for November 17th 2023
Green: Increase from previous day
Red: Decrease from previous day
Special Report
Don Vialoux was a guest last Thursday on "Wolf on Bay Street", a weekly radio show hosted by Wolfgang Klein and Jack Hardill. The show on Corus 640 was released at 7:00 PM EST on Saturday. Following are notes created prior to the show.
The year-end rally for North American equity indices continued last week. Historically, the best period to own U.S. and Canadian equities is from the last week in October to the first week in January.
The year-end rally normally occurs in three waves as the Christmas season approaches.
- From Oct. 27th to November 8th, the strongest nine consecutive trading period for the S&P 500 Index during the past 73 years.
- From just before U.S. Thanksgiving holiday to the end of November. This year the U.S. Thanksgiving holiday is earlier than usual: November 23rd .Historically, North American equity markets have moved higher just before and after "Black Friday", the biggest shopping day of the year. Consumers flock to stores to purchase Christmas bargains. In recent years "Black Friday" has been followed by "Online Monday" when on line Christmas purchases reach their peak.
- From December 15th to January 5th, better known as the Christmas rally. Investors are in a "joyous" mood prior to the Christmas celebration, prompting equity purchases in securities that are expected to benefit from a favourable outlook in the following year. Investment firms support their enthusiasm by releasing yearend reports highlighting their "top picks" for the following year.
What about this year?
- The exceptional period of strength in North American equity markets from October 27th to November 8th arrived on schedule this year. During the period the S&P 500 Index gained 6.5 % and the TSX Composite advanced. 4.2 %.
- Important U.S. economic news released this week prompted an earlier than usual advance by North American equity market prior to the "Black Friday" event. The October Consumer Price Index released on Tuesday was better than consensus. October CPI increased on a year-over-year rate at only a 3.2% rate, down from a 3.7% rate in September. Investors quickly assumed that efforts by the Federal Reserve to further dampen inflation pressures with higher interest rates have been "put on hold". North American equity markets responded accordingly by moving strongly higher. On Tuesday, S&P 500 gained 1.9% and the TSX Composite advanced.1.6% Next announcement from the Federal Reserve on inflation and interest rates is scheduled on December 13th
- Between now and December 13th investors will focus on "yearend transaction for tax purposes". Equity investing in 2023 was unusually difficult: With exception to the performance of the "Magnificent Seven" U.S. high tech stocks, U.S. and Canadian equity markets have recorded a "mixed" year. For example the S&P 500 equal weight ETF (Symbol: RSP) has been virtually unchanged year-to-date. Most investors will hold underperforming equities in their portfolio that have not achieved expectations during 2023. They are candidates for "tax loss selling" prior to the end of the year.
Interesting observation! During the past 20 periods between December 15th and March 7th the TSX Composite Index has outperformed the S&P 500 Index by 5.0%. That's the period when Canadians traditionally contribute to their RRSP and TSFA plans. Funds from these plans frequently are reinvesting into the Canadian equity market, boosting its relative performance.
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
Technical Notes for Friday
Uranium ETF $URA moved above $28.42 to a 10 year high extending an intermediate uptrend
Visa $V a Dow Jones Industrial Average stock moved above $249.53 to an all-time high extending an intermediate uptrend. Another good sign that Christmas sales this year could surprise on the upside!
Ross Stores $ROST a NASDAQ 100 stock moved above $130.24 to an all-time high extending an intermediate uptrend. Another good sign that Christmas sales could surprise on the upside!
Algonquin Power $AQN.TO a TSX 60 stock moved above Cdn$8.11 completing a reverse Head & Shoulder pattern.
Shopify $SHOP a TSX 60 stock moved above Cdn$93.83 extending an intermediate uptrend. Anticipating a favourable Christmas shopping season!
Links offered by valued providers
Michael Campbell's Money Talks for November 18th
November 18th Episode (mikesmoneytalks.ca)
Likelihood that Canada falls into something bigger than a mild recession
Likelihood that Canada falls into something bigger than a mild recession - YouTube
Stocks Poised For Next Leg Of Bear Market Decline | Your Daily Five (11.16.23)
Stocks Poised For Next Leg Of Bear Market Decline | Your Daily Five (11.16.23) - YouTube
EARLY START OF THANKSGIVING AND SANTA CLAUS STOCK MARKET RALLIES?
The Future of Equities is Clear – and BRIGHT! | Your Daily Five (11.17.23)
https://www.youtube.com/watch?v=LOEGaaI3Rqg
Cutting-Edge Seasonality Insights & Bitcoin 2024 Halving Impact | The Final Bar (11.17.23)
https://www.youtube.com/watch?v=gctGct6Da1M
Easy Way To Uncover Best Candidates For These Markets | The MEM Edge (11.17.23)
https://www.youtube.com/watch?v=afIT-2HLPLc
My Market Trend Model Is Pretty Bulled: David Keller
My Market Trend Model Is Pretty Bulled Up | The Mindful Investor | StockCharts.com
The Zweig Breadth Thrust Triggers, but the Indicator is Missing Something
Bob Hoye Nov 17, 2023: The Down Gradng on U.S. Credit Rating
The Down Grading of US Credit Rating
Victor Adair Nov 18, 2023: Trading Desk Notes for November 18th 2023
Trading Desk Notes For November 18, 2023
S&P 500 Momentum Barometers
The intermediate term Barometer added 4.60 on Friday and jumped 22.00 last week to 71.40. It changed from Neutral to Overbought on a move above 60.00. Daily trend remains up.
The long term Barometer added 3.20 on Friday and jumped 12.80 last week to 54.20. It remains Neutral. Daily trend remains up.
TSX Momentum Barometers
The intermediate term Barometer added 1.32 on Friday and jumped 14.10 last week to 59.03. It remains Neutral. Daily trend remains up.
The long term Barometer added 2.20 on Friday and advanced 6.17 last week to 43.61. It changed from Oversold to Neutral on a move above 40.00. Daily trend remains up.
Disclaimer: Seasonality ratings 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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