Tech Talk for Monday October 17th 2022

Next report is scheduled to be released on Monday October 24th 

The Bottom Line

Signs of an intermediate technical low by broadly based U.S. equity indices arrived last week. Equity indices recorded a rare "outside reversal" patterns with higher than average volume on Thursday.

Last of the really bad news on U.S. interest rates is expected to appear on November 2nd when the FOMC is expected to increase the Fed Fund rate by another 0.75% to 3.75%-4.00%. Note that the Federal Reserve in the past has been reluctant to change the Fed Fund Rate significantly just prior to Congressional elections (November 8th this year).

Seasonal influences for North American equities normally turn positive at this time of year for a seasonal trade lasting until the end of the first week in January. See the changes in seasonality ratings in the Trader's Corner section of this report.

Consensus for Earnings and Revenues for S&P 500 Companies

Analysts lowered earnings estimates significantly again last week. According to www.factset.com third quarter earnings on a year-over-year basis are expected to increase 1.6% (versus previous estimate at 2.4%) and revenues are expected to increase 8.5%. Fourth quarter earnings are expected to increase 3.6% and revenues are expected to increase 5.8% (versus previous estimate at 6.0%). For 2022 earnings are expected to increase 7.0% (versus previous estimate at 7.3%) and revenues are expected to increase 10.6%.

Preliminary estimates for 2023 also moved lower. According to www.factset.com first quarter 2023 earnings are expected to increase 5.8% (versus previous estimate at 6.2%) and revenues are expected to increase 5.5% (versus previous estimate at 5.8%). Second quarter 2023 earnings are expected to increase 4.3% (versus previous estimate at 5.1%) and revenues are expected to increase 2.7% (versus previous estimate at 3.2%). For all of 2023, earnings are expected to increase 7.6% (versus previous estimate at 7.9%)) and revenues are expected to increase 4.2 % (versus previous estimate at 4.3%).

Economic News This Week

October Empire State Manufacture Survey released at 8:30 AM EDT on Monday is expected to be -4.00 versus -1.50 in September.

September Capacity Utilization released at 9:15 AM EDT on Tuesday is expected to slip to 79.7 from 80.00 in August. September Industrial Production is expected to increase 0.1% versus a 0.2% decline in August.

September Housing Starts released at 8:30 AM EDT on Wednesday are expected to slip to 1.478 million units from 1.575 million units in August.

Canadian September Consumer Price Index released at 8:30 AM EDT on Wednesday is expected to slip 0.1% versus a drop of 0.3% in August. On a year-over-year basis, September Consumer Price Index is expected to slip to a gain of 6.8% from a gain of 7.0% in August.

October Philly Fed Index released at 8:30 AM EDT on Thursday is expected to improve to -4.5 from -9.9 in September.

September Existing Home Sales released at 10:00 AM EDT on Thursday are expected to slip to 4.69 million units from 4.80 million units in August.

August Canadian Retail Sales released at 8:30 AM EDT on Friday are expected to increase 0.2% versus a drop of 2.5% in July. Excluding auto sales, August Canadian Retail Sales are expected to increase 0.4% versus a drop of 3.1% in July.

Selected Earnings Reports This Week

Seven percent of S&P 500 companies have reported quarterly results to date. Another 66 companies including 8 Dow Jones Industrial companies are scheduled to report this week.

Trader's Corner

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for October 14th 2022

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for October 14th 2022

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for October 14th 2021

Green: Increase from previous day

Red: Decrease from previous day

All changes in seasonality ratings are relative to the S&P 500 Index

Technical Notes for Friday

Nil

Links offered by valued providers

Mark Leibovit's comment on April 14th

Trading in Volatile Markets - HoweStreet

Erin Swenlin says "Take a sip of the food & beverage ETF".

https://www.youtube.com/watch?v=42SWMm92HbA

Michael Campbell's Money Talks for October 15th

Michael Campbell's MoneyTalks - Complete Show (mikesmoneytalks.ca)

Carter Worth plots potential paths for S&P 500

‘Chartmaster’ Carter Worth plots potential paths for S&P - YouTube

Links offered by Mark Bunting and www.uncommonsenseinvestor.com

Three Reasons Stocks Haven’t Bottomed & Inflation Could Last 10 Years – Uncommon Sense Investor

Four Ways to Determine Your Risk Tolerance – Uncommon Sense Investor

Michael Campbell's Money Talks for October 15th

Michael Campbell's MoneyTalks - Complete Show (mikesmoneytalks.ca)

Links offered by Mark Bunting and www.uncommonsenseinvestor.com

Three Reasons Stocks Haven’t Bottomed & Inflation Could Last 10 Years – Uncommon Sense Investor

Four Ways to Determine Your Risk Tolerance – Uncommon Sense Investor

Chart of the Day

Seasonal influences for the Nikkei Average recently turned Positive for an upside move lasting to January. 6th. Technical parameters also are improving: Strength relative to the S&P 500 changed from Neutral to Positive (Technical Score from 0 to 2), the Index moved above its 20 day moving average (Technical Score from -1 to +1). Daily momentum indicators changed from
Down to Up (Technical Score from -1 to +1). Total Technical Score improved from -4 to +2.

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

S&P 500 Momentum Barometers

The intermediate term Barometer dropped 6.00 on Friday and 0.60 last week to 11.60. It remains deeply Oversold.

The long term Barometer dropped 3.60 on Friday and 1.80 last week. It remains deeply Oversold.

TSX Momentum Barometers

The intermediate term Barometer dropped 8.90 on Friday and 8.05 last week to 21.19. It remains Oversold.

The long term Barometer dropped 3.81 to 22.46 on Friday and 2.12 last week to 22.46. It remains Oversold.

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