Tech Talk for Monday September 23rd 2019

U.S. equity index futures were lower this morning. S&P 500 futures were down 2 points in pre-opening trade.

U.S. steel stocks and its related ETF are expected to open lower after JP Morgan downgraded AK Steel , Nucor, Steel Dynamics, Commercial Metals and U.S. Steel and lowered their target prices.

Nvidia was unchanged at $172.63 despite an increase in target price by SunTrust to $216 from $210.

Dollar General was unchanged at $156.23 despite an increase in target price by JP Morgan to $184 from $173.

Amazon dropped $10.16 to $1784.00 after Morgan Stanley lowered its target price to $2200 from 2300.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/09/20/stock-market-outlook-for-september-23-2019/

Note seasonality chart on Canadian Retail Sales.

The Bottom Line

World equity markets were mixed last week with 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) rolled over last week.

Short term technical indicators for Canadian markets and sectors continued moving higher at overbought levels last week

Third quarter corporate reports start to trickle in this week: Nine S&P 500 companies and one Dow Jones Industrial company are scheduled to report.

'Tis the season between now and the first week in October when major companies "confess" if they were unable to achieve previous guidelines.

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 3.8% (greater than the previous estimate of a drop of 3.7% last week) and revenues are expected to increase 2.8%. Eighty two companies have issued negative third quarter guidance and 31 companies have issued positive third quarter guidance. Fourth quarter earnings are expected to increase 3.0% (down from 3.2%) and fourth quarter revenues are expected to increase 3.6% (down from 3.7%). For all of 2019, earnings are expected to increase 1.3% and revenues are expected to increase 4.1% (down from 4.2%). First quarter 2020 earnings are expected to increase 7.9% and revenues are expected to increase 5.4 % (down from 5.5%). Second quarter 2020 earnings are expected to increase 9.0% (down from 9.1%) and revenues are expected to increase 6.3% (down from 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

August New Home Sales to be released at 10:00 AM EDT on Wednesday are expected to increase to 660,000 from 635,000 in July.

Next estimate of second quarter U.S.GDP to be released at 8:30 AM EDT on Thursday is expected to remain unchanged at 2.0%.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 212,000 from 208,000 last week.

August Durable Goods Orders to be released at 8:30 AM EDT on Friday are expected to drop 1.2% versus a gain of 2.0% in July. Excluding Transportation Orders, August Durable Goods Orders are expected to increase 0.3% versus a drop of 0.4% in July.

August Personal Income to be released at 8:30 AM EDT on Friday is expected to increase 0.4% versus a gain of 0.1% in July. August Personal Spending is expected to increase 0.3% versus a gain of 0.6% in July.

September Michigan Consumer Sentiment Index to be released at 10:00 AM EDT on Friday is expected to remain unchanged from August at 92.0

Earnings News This Week

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for September 20th 2019

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for September 20th 2019

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for September 20th 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

Greg Schnell's Weekly Comment from www.stockcharts.com released on Saturday. Following is the link:

https://www.youtube.com/watch?v=1vXyZqk5vJE

StockTwits released on Friday @EquityClock

Paris CAC Index moved above 5,672.77 to an all-time high extending an intermediate uptrend $CAC

Xilinx $XLNX, a NASDAQ 100 stock moved below $98.00 and $97.34 setting an intermediate downtrend

Facebook $FB, one of the FAANG stocks and a NASDAQ 100 stock moved above intermediate resistance at $191.38

Inter Pipeline $IPL.CA, a TSX 60 stock moved below $23.64 completing a double top pattern.

India ETF $PIN moved above $23.70 completing a reverse Head & Shoulders pattern

Canadian Tire $CTC.A.CA, a TSX 60 stock moved above intermediate resistance at $145.74

BMO Equal Weight Canadian Bank ETF $ZEB.CA moved above $29.37 resuming an intermediate uptrend. It also is testing its all-time high at $29.63.

Gildan Activewear $GIL.CA, a TSX 60 stock moved below $47.19 to complete a Head & Shoulders pattern

S&P Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 72.00 from 70.80. Percent is intermediate overbought and showing early signs of peaking.

Bullish Percent Index for S&P 500 stocks increased last week to 68.80 from 67.80. The Index remains intermediate overbought.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average increased last week to 72.41 from 61.21. Percent remains intermediate overbought, but has yet to show signs of peaking.

Bullish Percent Index for TSX stocks increased last week to 64.44 from 62.34. The Index remains intermediate overbought, but has yet to show signs of peaking.

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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