Tech Talk for Monday September 30th 2019

There will be no reports during first week of October.   Come back on Monday, October 7th for the next report release.

The Bottom Line

World equity markets moved lower 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 North American equity markets is from mid-September to mid-October while other developed equity markets in the world tend reach a seasonal low in the first half of 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. Seasonal influences for equity markets in other developed nations tend to start bottoming in the first 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 lower last week. They are overbought and showing signs of rolling over. See charts near the end of this report

Medium term technical indicators for Canadian equity markets also moved lower last week. They also are overbought and showing signs of rolling over. 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) moved lower last week.

Short term technical indicators for Canadian markets and sectors also moved lower last week

Third quarter corporate reports continue to trickle in this week: Seven S&P 500 companies 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 slightly for S&P 500 companies. According to FactSet, third quarter earnings on a year-over-year basis are expected to drop by 3.7% 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 2.9% (down from 3.0% last week) and fourth quarter revenues are expected to increase 3.6%. For all of 2019, earnings are expected to increase 1.3% and revenues are expected to increase 4.1%. First quarter 2020 earnings are expected to increase 7.8% (down from 7.9%) and revenues are expected to increase 5.4 %. Second quarter 2020 earnings are expected to increase 9.0% and revenues are expected to increase 6.3%. Earnings for all of 2020 are expected to increase 10.6% and revenues are expected to increase 5.6%.

Economic News This Week

OPEC meeting tentatively is scheduled on Monday.

September Chicago PMI to be released at 9:45 AM EDT on Monday is expected to slip to 49.9 from 50.4 in August.

July Canadian GDP to be released at 8:30 AM EDT on Tuesday is expected to increase 0.1% versus a gain of 0.2% in June.

August Construction Spending to be released at 10:00 AM EDT on Tuesday is expected to increase 0.4% versus a gain of 0.1% in July.

September Manufacturing ISM to be released at 10:00 AM EDT on Tuesday is expected to increase to 50.0 from 49.1 in August.

September ADP Private Employment Report to be released at 8:15 AM EDT on Wednesday is expected to slip to 140,000 from 195,000 in August.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 215,000 from 213,000 last week.

August Factory Orders to be released at 10:00 AM EDT on Thursday are expected to fall 0.5% versus a gain of 1.4% in July.

September Services ISM to be released at 10:00 AM EDT on Thursday is expected to drop to 55.0 from 56.4 in August

September Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to increase to 140,000 from 130,000 in August. September Unemployment Rate is expected to remain unchanged from August at 3.7%. September Hourly Earnings are expected to increase 0.3% versus a gain of 0.4% in August.

U.S. August Trade Deficit to be released at 8:30 AM EDT on Friday is expected to increase to $54.6 billion from $54.0 billion in July.

Canadian August Canadian Merchandise Trade to be released at 8:30 AM EDT on Friday is expected to improve to a deficit of $1.0 billion from a deficit of $1.12 billion in July.

Earnings News This Week

Trader's Corner

Note changes in Seasonal ratings

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for September 27th 2019

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for September 27th 2019

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for September 27th 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

StockTwits released on Friday @EquityClock

Silver ETN $SLV moved below $16.28 completing a short term double top pattern. Gold and silver equities have responded by breaking short term support levels: $PAAS $ELD.CA $YRI.CA

Facebook $FB, a NASDAQ 100 stock moved below $176.66 setting an intermediate downtrend.

Restaurant Brands International $QSR.CA, a TSX 60 stock moved below $92.80 completing a Head & Shoulders pattern.

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading below their 50 day moving average dropped 8.27 to 63.73 last week. It remains intermediate overbought and has started to trend down.

Bullish Percent Index for S&P 500 stocks dropped 4.00 to 64.80 last week. It remains intermediate overbought and has started to roll over.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average dropped 14.40 to 58.01 last week. Percent changed to intermediate neutral from intermediate overbought on a fall below 60.00 and has started to trend down.

Bullish Percent Index for TSX stocks slipped 2.10 to 62.34 last week. Percent remains intermediate overbought and has started to roll over.

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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