Tech Talk for Monday November 4th 2019

U.S. equity index futures were higher this morning. S&P 500 futures were up 20 points in pre-opening trade. The Dow Jones Industrial Average is expected to open above its previous all-time high at 27,369.68.

Bausch Health added $0.78 to $26.70 U.S. after reporting higher than consensus third quarter earnings.

McDonalds dropped $3.83 to $190.11 after the company fired its Chief Executive Officer. Several investment dealers lowered their target price on the stock.

Under Armour dropped $2.69 to $18.45 after the company announced an accounting probe. The company also lowered its revenue guidance.

JP Morgan raised its target prices on U.S. Money Center banks including Wells Fargo, Citigroup and Bank of America. The money center ETF (KBE $44.95) is expected to open higher.

EquityClock's Daily Market Comment

Following is a link:
http://www.equityclock.com/2019/11/01/stock-market-outlook-for-november-4-2019/

Note seasonality chart on Non-farm Payrolls.

The Bottom Line

World equity markets continued moving higher last week in line with their historic period of seasonal strength. Recent concerns have been discounted including an earnings recession by major U.S. companies until the first quarter next year, growing efforts by the Democrats to impeach Donald Trump, continuing trade uncertainties between China and the U.S. and growing Middle East tensions. Despite uncertainties, broadly based European, emerging markets and U.S. equity indices are testing and moving one year highs, and in some instances, to all-time highs. Seasonal influences remain positive for most equity markets until the first week in January

Observations

Seasonal influences this year continue to follow their historic pattern. Seasonal influences on U.S. and Canadian equity markets turn positive in the second half of October. Seasonal influences for equity markets in other developed nations turn positive in early October.

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 moving higher last week.

Medium term technical indicators for Canadian equity markets also moved higher last week.

Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) maintained overbought levels last week.

Short term technical indicators for Canadian markets and sectors returned to overbought levels last week.

Third quarter corporate reports continue to flood in this week: Another 90 S&P 500 companies are scheduled to report this week including one Dow Jones Industrial company. The flood by major Canadian companies starts this week. About 71% of S&P 500 companies have reported to date: 76% have exceeded consensus earnings estimates and 61% have exceeded revenue estimates. Consensus for S&P 500 companies now calls for a 2.7% drop in third quarter earnings and a 3.1% increase in third quarter revenues.

Beyond third quarter results, analysts continue to reduce earnings and revenue estimates for S&P 500 companies. According to FactSet, fourth quarter earnings are expected to decrease 0.4% (down from a gain of 0.7%% last week) and fourth quarter revenues are expected to increase 2.6% (down from 3.0% last week). For all of 2019, earnings are expected to increase 0.3% (down from 0.6% last week) and revenues are expected to increase 4.0%. First quarter 2020 earnings are expected to increase 5.8% (down from 6.0%) and revenues are expected to increase 4.5 % (down from 4.7% last week). Second quarter 2020 earnings are expected to increase 6.7% (down from 7.3%) and revenues are expected to increase 4.9% (down from 5.2%). Earnings for all of 2020 are expected to increase 9.8% (down from 9.9%) and revenues are expected to increase 5.3%.

Economic News This Week

September Factory Orders to be released at 10:00 AM EST on Monday is expected to decline 0.5% versus a decline of 0.1% in August.

Canadian September Trade Balance to be reported at 8:30 AM EST on Tuesday is expected to record a deficit of $700 million versus a deficit of $960 million in August.

U.S. October Trade Deficit to be reported at 8:30 AM EST on Tuesday is expected to slip to $52.50 billion from $54.9 billion in September.

October Services ISM to be released at 10:00 AM EST on Tuesday is expected to improve to 53.4 from 52.6 in September.

Third quarter Non-farm Productivity to be released at 8:30 AM EST on Wednesday is expected to increase 0.9% versus a gain of 2.3% in the second quarter.

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday is expected to slip to 215,000 from 218,000 last week.

October Canadian Housing Starts to be released at 8:15 AM EST on Friday is expected to slip to 220,000 units from 221,200 units in September.

October Canadian Employment to be released at 8:30 AM EST on Friday is expected to increase 20,000 versus a gain of 53,700 in September. The October Unemployment Rate is expected to remain unchanged from September at 5.5%.

November Michigan Consumer Sentiment Index to be released at 10:00 AM EST on Friday is expected to increase to 96.0 from 95.5 in October.

Selected Earnings News This Week

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for November 1st 2019

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for November 1st 2019

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for November 1st 2019

Green: Increase from previous day

Red: Decrease from previous day

Greg Schnell's Market Buzz

Comment released on Friday. Following is a link:

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

This is going to be a challenge to survive

Following is a note from Michael Campbell

"I have never witnessed such complete disruption to the world economy on such a massive scale. This is going to be a challenge to survive."

Martin Armstrong

Hi ,
That's a serious statement and I'll bet big time that it's true.  Problems we've been warning about at the World Outlook Financial Conference and on MoneyTalks - pensions, sovereign debt, European banking disasters, political upheaval - they are happening right before our eyes, but few seem to understand (or care?) what's going on.

This past week the former head of the Bank of England, Melvyn King stated that "we are sleep walking toward a crisis" that will surpass 2008.  We're not talking about an event in the distant future. It's already begun to happen, and as we go through the next two years everyone is going to be impacted.

I'll give you an example.  In late September interest charged by banks to lend to other banks overnight jumped from 2% to 10% in a matter of hours.  In other words, banks were afraid to lend to other banks so they charged a massive risk premium forcing the Federal Reserve to inject $500 billion into the lending markets in just a week. And they're still putting hundreds of billion in the system because lending banks are worried what's on the balance sheet of the borrowing banks.

That's what a liquidity crisis looks like.  Suddenly governments, pension funds and other major institutions trying to sell bonds can't find a buyer.  That's what happened during the 2008 credit crisis and the losses were huge. Pension funds are already being impacted by the manipulation of interest rates to record lows with over $15 trillion in negative yield bonds - but the losses during a liquidity and monetary crisis will be much greater.

I think most people had to know deep down that trying to solve the 2008 credit and debt crisis by encouraging more borrowing with record low interest rates would have consequences.

By the way, if you understand what's going on and position yourself correctly not only will you survive this period but you'll make a lot of money. For example, we've been talking about the problems in Europe pushing money into the US dollar and quality stocks in search of safety since 2010 and the Greek bond crisis.  And it's still happening.  US stocks are making new highs while the US dollar continues to be the strongest currency in the world.

Our financial well being rests on understanding of what's driving these events, yet few people seem to.  And by the way - while I appreciate there are a ton of opinions and analysis out there, the only way to evaluate and judge whether one approach or model is better than another is the examine the track record. And on that score I don't know a better one than what we've produced at the World Outlook Financial Conference. We unequivocally forecast the record bull market run since March 2009 - and we haven't changed our long term view.

Coming out of the turmoil and decline last November and December we predicted increasing volatility with indexes pushing to new highs.  And here we are over 10 months later and we've witnessed the volatility along with new highs in the major indexes.

Specific stock recommendations at the conference like Microsoft are up 35%, Xpel Inc is up 95%, Viemed is up over 85%, Go Easy is up 37%, Parkland Fuel is up 22%.  Our small cap portfolio put together with Ryan Irvine and Keystone Financial is once again up double digits. Virtually all recommendations are up with the notable exception of oil and gas stocks, but those recommendations were for people willing to hold 3 to 5 years. It wasn't a trading recommendation so the jury is still out. At this year's conference we will ask Josef Schachter for an update.

Making money and protecting you from losses is the goal of the World Outlook Financial Conference, and I'm very pleased with the results. For anyone who acted on the specific advice, the $159 ticket was probably the best investment they made last year.

Here's A Bit of A Shock

What's about to happen in the next 2 years is going to make the last five years seem tame. The Deutsche Bank's financial problems are scaring bankers throughout the world, Europe's sovereign debts are insurmountable, the Brexit outcome is still uncertain with the UK election on December 12th.  Can you imagine what the market response will be if Labour's far, far left Jeremy Corbyn wins?

Our goal is to make sure you are not only protected from the fall-out of these events but also profit. Unfortunately, the vast majority of people won't be prepared. For example, retirees aren't going to receive the promised benefits in many cities and states. Consider that Illinois' pension liability is now 280% of its entire annual tax revenues. Their state pension needs another $137 billion to meet their obligations - and it's not going to happen.

My Point

The world is changing in dramatic fashion. Volatility is going to intensify. The World Outlook Financial Conference track record speaks for itself. Our official World Outlook Small Cap portfolio has delivered double digit returns every year. We can help you navigate those changes and the volatility.

To sum it up - this is my long winded way of saying I hope I see you at our 31th annual Conference along with speakers like Martin Armstrong, Greg Weldon, Ryan Irvine, and James Thorne to name just a few.

Then again, maybe you're not interested - and believe me I get that. Maybe you already are on top of things. Maybe there's something good on TV. I have no idea. All I know is that periods of historic change provide incredible opportunities and incredible danger.

All I'm trying to do is help you avoid the danger part and take advantage of the opportunities.

The 2020 World Outlook Conference is Friday, February 7th and Saturday, February 8th at the Westin Bayshore Conference Centre in Vancouver.  For tickets and other details CLICK HERE.

I hope to see you there.

Sincerely

Mike

P.S.   Check our the list of "extras" with our VIP tickets - and the EARLY BIRD prices for the next few weeks!

? Breakfast and lunch with bonus speakers and presentations

? Reserved seating

? VIP Investment Kit

? and more...

Finally

As you may know I am hugely interested in educating our younger generation and to that end we have a special offer - if you buy a ticket - you can bring a student absolutely free. Simply add the student ticket(s) to your cart when you order your own passes

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

Lithium ETN $LIT moved above $25.27 setting an intermediate uptrend.

Vietnam ETF $VNM moved above $16.34 extending an intermediate uptrend.

Pharmaceutical ETF $PPH moved above $59.63 resuming an intermediate uptrend.

NASDAQ Composite Index $COMPQ moved above $8339.64 to an all-time high extending an intermediate uptrend.

Water Resources ETF $PHO moved above $37.18 to an all-time high extending an intermediate uptrend

Caterpillar $CAT, a Dow Jones Industrial stock moved above $142.54 extending an intermediate uptrend.

Berkshire Hathaway $BRK.B, an S&P 100 stock moved above $214.58 resuming an intermediate uptrend.

Early signs, that initial negotiations on a China/U.S. trade deal will be successful, have surfaced. China large cap iShares $FXI moved above $41.97 setting an intermediate uptrend.

Bausch Health Companies $BHC.CA, a TSX 60 stock moved above $33.90 extending an intermediate uptrend.

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 70.54 from 66.53. Percent remains intermediate overbought, but continues to trend up.

Bullish Percent Index for S&P 500 stocks increased last week to 67.60 from 62.40. The Index remains intermediate overbought, but continues to trend up.

TSX Momentum Barometer

Percent of TSX stocks trading above their 50 day moving average increased last week to 56.92 from 42.79. Percent remains intermediate neutral and trending higher.

Bullish Percent Index for TSX stocks increased last week to 61.80 from 60.09. The Index remains intermediate overbought.

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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