Tech Talk for Monday September 9th 2019
Following is a link:
http://www.equityclock.com/2019/09/06/stock-market-outlook-for-september-9-2019/
Note seasonality charts on U.S. Non-farm Payrolls and Canadian Employment
The Bottom Line
World equity markets moved 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. 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 be positive in the first half of September and negative in the second half. Seasonal influences for Canadian equity markets tend to peak at the end of August followed by weakness to at least mid-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. See charts near the end of this report
Medium term technical indicators for Canadian equity markets also moved higher again last week. 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 3.6% (greater than the previous estimate of a drop of 3.5% last week) and revenues are expected to increase 2.9% (down from an increase of 3.1%). Earnings declines by companies with more than 50% of sales outside of the U.S. will be particularly hard hit in the third quarter due to strength in the U.S. Dollar Index. Consensus calls for a 10.7% decline. Eighty companies have issued negative third quarter guidance and 30 companies have issued positive third quarter guidance. Fourth quarter earnings are expected to increase 3.4% (down from 3.5%) and fourth quarter revenues are expected to increase 3.8% (down from 4.0%). For all of 2019, earnings are expected to increase 1.4% (down from 1.5%) and revenues are expected to increase 4.3% (down from 4.4%). First quarter 2020 earnings are expected to increase 8.1% (down from 8.2%) and revenues are expected to increase 5.5 % (down from 5.7%). Second quarter 2020 earnings are expected to increase 9.2% (down from 9.3%) and revenue are expected to increase 6.4% (down from 6.5%)
Economic News This Week
August Canadian Housing Starts to be released at 8:15 AM EDT on Tuesday are expected to drop to 204,500 from 222,000 in July.
August Producer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.1% versus a gain of 0.2% in July. Excluding food and energy, August Producer Price Index is expected to increase 0.2% versus a decline of 0.1% in July
Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to remain unchanged from last week at 217,000.
August Consumer Price Index to be released at 8:30 AM EDT on Thursday is expected to increase 0.1% versus a gain of 0.3% in July. Excluding food and energy, August Consumer Prices Index is expected to increase 0.2% versus a gain of 0.3% in July.
August Retail Sales to be released at 8:30 AM EDT on Friday are expected to increase 0.2% versus a gain of 0.7% in July. Excluding auto sales, August Retail Sales are expected to increase 0.1% versus a gain of 1.0% in July.
July Business Inventories to be released at 10:00 AM EDT on Friday are expected to increase 0.3% versus a no change in June.
September Michigan Sentiment Index to be released at 10:00 AM EDT on Friday is expected to increase to 90.7 from 89.8 in August.
Earnings News This Week
Trader's Corner
Equity Indices and related ETFs
Daily Seasonal/Technical Equity Trends for September 6th 2019
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for September 6th 2019
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for September 6th 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
In just three week's time, 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
Lululemon $LULU moved above $194.25 to an all-time high extending an intermediate uptrend. Strength is related to higher than consensus second quarter results, positive 2019 guidance and target hikes by JP Morgan and Susquehanna
Natural gas ETN $UNG moved above $21.39 extending an intermediate uptrend.
‘Tis the season for natural gas to move higher to late December! $UNG $HUN.CA $HNU.CA
Symantec $SYMC, a NASDAQ 100 stock moved above $23.85 setting 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 59.80 from 43.80. Percent increased to just below 60.00, the level considered to be intermediate overbought.
Bullish Percent Index for S&P 500 stocks increased last week to 61.40 from 53.40. The Index changed to intermediate overbought from intermediate neutral on a move above 60.00, 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 60.78 from 49.36. Percent changed to intermediate overbought from intermediate neutral on a move above 60.00, but has yet to show signs of peaking.
Bullish Percent Index for TSX stocks was unchanged last week at 61.09. 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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