Tech Talk for Monday September 16th 2019
U.S. equity index futures moved lower this morning. S&P 500 futures were down 10points in pre-opening trade.
Index futures responded to a drone strike on Saudi Arabia's oil production facilities over the weekend. Crude oil jumped $5.31 to $60.16 per barrel and gold added $12.30 to $1511.80 per ounce on the news. Oil stock prices moved higher.
Index futures were virtually unchanged following release of the September Empire State Manufacturing Survey at 8:30 AM EDT. Consensus was a slip to 3.00 from 4.80 in August. Actual was 2.00.
General Motors dropped $0.81 to $38.05 after UAW employees went on strike
Lowe's added $0.64 to $114.00 after Wedbush upgraded the stock to Outperform from Neutral.
Aurora Canabis (ACB $5.95 U.S.) is expected to open lower after Stifel Nicolaus downgraded the stock to Sell from Hold. Target was reduced to $5.00 from $7.00 U.S.
EquityClock's Daily Market Comment
Following is a link:
http://www.equityclock.com/2019/09/13/stock-market-outlook-for-september-16-2019/
Note seasonality chart on Retail Trade/
The Bottom Line
World equity markets continued moving higher last week despite elevated volatility. Equity markets have a history of elevated volatility at this time of year with a flat/downward bias from mid-July to mid-October. The weakest period for most equity markets in the world is from mid-September to mid-October. Supplemental concerns this year include an earnings recession by major U.S. companies until the fourth quarter this year (particularly companies with extensive international operations), growing efforts by the Democrats to impeach Donald Trump, growing Middle East tensions and unsettled trade negotiations between the U.S. and China.
Observations
Seasonal influences on U.S. equity markets tend to turn negative from the second half of September to the second half of 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) moved higher again last week. They are overbought, but have yet to show signs of peaking. See charts near the end of this report
Medium term technical indicators for Canadian equity markets also moved higher again last week. They also are overbought, but have yet to show signs of peaking. See charts near the end of this report.
Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) remained at overbought levels last week.
Short term technical indicators for Canadian markets and sectors also remained at overbought levels last week
Analysts continue to reduce earnings and revenue estimates for S&P 500 companies. According to FactSet, third quarter earnings on a year-over-year basis are expected to drop by 3.7% (greater than the previous estimate of a drop of 3.6% last week) and revenues are expected to increase 2.8% (down from an increase of 2.9%). Eighty companies have issued negative third quarter guidance and 30 companies have issued positive third quarter guidance. Fourth quarter earnings are expected to increase 3.2% (down from 3.4%) and fourth quarter revenues are expected to increase 3.7% (down from 3.8%). For all of 2019, earnings are expected to increase 1.3% (down from 1.4%) and revenues are expected to increase 4.2% (down from 4.3%). First quarter 2020 earnings are expected to increase 7.9% (down from 8.1%) and revenues are expected to increase 5.5 %. Second quarter 2020 earnings are expected to increase 9.1% (down from 9.2%) and revenues are expected to increase 6.4%. Earnings for all of 2020 are expected to increase 10.6% and revenues are expected to increase 5.6%.
Economic News This Week
September Empire State Manufacturing Survey to be released at 8:30 AM EDT on Monday is expected to slip to 4.55 from 4.80 in August.
August Capacity Utilization to be released at 9:15 AM EDT on Tuesday is expected to increase to 77.6 from 77.5 in July. August Industrial Production is expected to increase 0.2% versus a decline of 0.2% in July.
August Housing Starts to be released at 8:30 AM EDT on Wednesday is expected to increase to 1.230 million units from 1.191 million units in July.
August Canadian Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to decrease 0.1% versus a gain of 0.5% in July.
FOMC statement on monetary policy is released at 2:00 PM EDT on Wednesday. Consensus calls for a 0.25% decline in the Fed Fund Rate.
Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday is expected to increase to 210,000 from 204,000 last week.
September Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to dip to 10.0 from 16.8 in August.
August Existing Home Sales to be released at 10:00 AM EDT on Thursday are expected to slip to 5.37 million units from 5.42 million units in July.
Canadian July Retail Sales to be released at 8:30 AM EDT on Friday is expected to increase 0.8% versus no change in June.
Earnings News This Week
Trader's Corner
Note changes in seasonal ratings
Equity Indices and related ETFs
Daily Seasonal/Technical Equity Trends for September 13th 2019
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for September 13th 2019
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for September 13th 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
Jon and Don Vialoux at the Toronto MoneyShow
Next weekend, we’ll be presenting at the Toronto Money Show on the topic of "Improving Investment Returns by Combining Seasonal, Fundamental, and Technical Analysis."
Panel Workshop Details
Sep. 21, 2:45 PM – 3:30 PM EST
Saturday
Improving Investment Returns by Combining Seasonal, Fundamental, and Technical Analysis
The end of September is the opportune time to review your investment portfolio prior to start of the traditional period of seasonal strength for equity markets in October. Which markets, sectors and securities have the best technical and fundamental profiles this year? Join the father-and-son team of Don and Jon Vialoux for an update.
Attend for free by navigating to the @MoneyShows website: https://conferences.moneyshow.com/moneyshow-toronto/workshop/991d533c1252427eba49b134bd6d6009/improving-investment-returns-by-combining-seasonal-fundamental-and-technical-analysis/?scode=048217 ... $MACRO $STUDYpic.twitter.com/5r5aRNk26H
Background on Don Vialoux
StockTwits released on Friday @EquityClock
India ETF $PIN completed a base building pattern on a moved above $23.62
Canadian "gassy" stocks continue to record extraordinary gains. Example: $AAV.CA (Up over 50% during the past two weeks)
S&P 500 Momentum Barometers
Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 70.80 from 59.80. Percent changed from intermediate neutral to intermediate overbought on a move above 60.00, but has yet to show signs of peaking.
Bullish Percent Index for S&P 500 stocks increased last week to 67.80 from 61.40. The Index remains intermediate overbought, but has yet to show signs of peaking.
TSX Momentum Barometers
Percent of TSX stocks trading above their 50 day moving average increased last week to 61.21 from 60.78. Percent remains intermediate overbought.
Bullish Percent Index for TSX stocks increased last week to 62.34 from 61.09. Percent 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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