Tech Talk for Tuesday September 3rd 2019
U.S. equity index futures were lower this morning. S&P 500 futures were down 21 points in pre-opening trade. Index futures responded to growing trade tensions.
Snap added $0.34 to $16.17 after Evercore ISI upgraded the stock to Outperform from In Line.
Bausch Health was unchanged at $28.37 after announcing plans to reduce debt by $200 million.
Amazon dipped $5.23 to $1,771.06 despite an increase in target price to $2,600 from $2,250 by RBC Capital
Campbell Soup (CPB $45.00) is expected to open higher after JP Morgan raised its target price to $48 from $41.
EquityClock's Daily Market Comment
Following is a link:
http://www.equityclock.com/2019/08/30/stock-market-outlook-for-september-3-2019/
Note seasonality chart on Canadian GDP.
The Bottom Line
The traditional period of summer volatility in world equity markets continued last week, but with a positive bias from a short term technical oversold level. Equity markets have a history of entering into a period of increased 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.
The VIX Index remained at elevated levels again last week, in line with its historical trend between mid-July and 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 last week. See charts near the end of this report
Medium term technical indicators for Canadian equity markets also moved higher 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) turned higher last week.
Short term technical indicators for Canadian markets and sectors also turned higher last week.
Analysts continue to reduce earnings estimates for S&P 500 companies. Ninety nine percent of S&P 500 companies have reported second quarter results to date. According to FactSet, second quarter earnings are projected to drop 0.4% on a year-over-year basis and second quarter revenues are expected to increase 4.0%. The drop in second quarter earnings confirms that earnings have declined in two consecutive quarters, the definition of an earnings recession. Third quarter earnings also are expected to drop by 3.5% (down from a previous estimate of a drop of 3.1%) and revenues are expected to increase 3.1%. Seventy nine companies have issued negative third quarter guidance and 30 companies have issued positive third quarter guidance. Fourth quarter earnings are expected to increase 3.5% (down from 3.9%) and fourth quarter revenues are expected to increase 4.0%. For all of 2019, earnings are expected to increase 1.5% and revenues are expected to increase 4.4%. First quarter 2020 earnings are expected to increase 8.2% (down from 8.5%) and revenues are expected to increase 5.7 %. Second quarter 2020 earnings are expected to increase 9.3% (down from 9.9%) and revenue are expected to increase 6.5%
The U.S. Dollar Index spiked higher on Friday to a 27 month high, further dampening third quarter sales and earnings expectations for companies with extensive international operations.
Economic News This Week
August ISM Manufacturing to be released at 10:00 AM EDT on Tuesday is expected to slip to 51.0 from 51.2 in July.
July U.S. Trade Deficit to be released at 8:30 AM EDT on Wednesday is expected to drop to $53.50 billion from $55.20 billion in June.
July Canadian Trade Balance to be released at 8:30 AM EDT on Wednesday is expected to report a $400 million deficit versus a $140 million surplus in June.
August ADP Private Employment to be released at 8:15 AM EDT on Thursday is expected to slip to 148,000 from 156,000 in July.
Bank of Canada interest rate decision to be released at 10:00 AM EDT on Wednesday is expected to show no change in the lending rate to major Canadian banks.
Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to remain unchanged from last week at 215,000.
July Factory Orders to be released at 10:00 AM EDT on Thursday are expected to increase 1.0% versus a gain of 0.6% in June.
August Services ISM to be released at 10:00 AM EDT on Thursday is expected to increase to 53.9 from 53.7 in July.
August Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to drop to 159,000 from 164,000 in July. August Unemployment Rate is expected to remain unchanged from July at 3.7%. Average Hourly Earnings are expected to increase 0.3% versus a gain of 0.3% in July.
August Canadian Employment to be released at 8:30 AM EDT on Friday is expected to increase 15,000 versus a decline of 24,200 in July. August Unemployment Rate is expected to remain unchanged at 5.7%.
Earnings News This Week
Trader's Corner
Equity Indices and related ETFs
Daily Seasonal/Technical Equity Trends for August 30th 2019
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for August 30th 2019
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for August 30th 2019
Green: Increase from previous day
Red: Decrease from previous day
Technical Scoop
Headline reads, "Maybe tsunami, mixed signals, notorious September, topping gold, warning curve, negative yield"
Following is a link to David Chapman's weekly comment courtesy of www.EnrichedInvesting.com
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
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
Weekly comment by Greg Schnell from www.StockCharts.com
Greg asks, "What wall of worry"? Following is the link:
https://www.youtube.com/watch?v=dzQEvKWu4q8&feature=youtu.be
StockTwits released on Friday @EquityClock
Seagate Technologies $STX, a NASDAQ 100 stock moved above $50.55 extending an intermediate uptrend.
Medical Devices iShares $IHI moved above $250.14 to an all-time high extending an intermediate uptrend.
Norbord $OSB moved above $32.52 completing a double bottom pattern. Benefits from OSB sales triggered by hurricane concerns
S&P 500 Momentum Barometers
Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 43.80 from 30.00. Percent changed to intermediate neutral from intermediate oversold on a move above 40.00.
Bullish Percent Index for S&P 500 stocks increased last week to 53.40 from 49.80. The Index remains intermediate neutral.
TSX Momentum Barometers
Percent of TSX stocks trading above their 50 day moving average increased last week to 49.36 from 38.46. Percent changed to intermediate neutral from intermediate oversold on a move above 40.00.
Bullish Percent Index for TSX stocks increased last week to 61.09 from 60.25. The Index 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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