Tech Talk for Monday December 4th 2017

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Text of comments offered on Mark’s show

Audio on Mr. Vialoux’s section of the show is poor. Following is the text:

Recent tax loss selling pressures in selected sectors is setting up a buying opportunity beginning in the second half of December. The sectors that have been under the most downside tax loss selling pressures are the energy, oil services and gold sectors. All enter a period of seasonal strength in mid-December.

Oil Services ETF (OIH $25.40) is forming a potential reverse head and shoulders pattern. The pattern is completed on a move above $26.27. Seasonal influences are positive from mid-December to the end of April.

Gold equities and related ETFs have been forming base building patterns. They likely will remain in these patterns until after the Federal Reserve announces a 0.25% increase in the Fed Fund rate on December 13th. Thereafter, precious metals and precious metal prices are expected to move higher as they enter a period of seasonal strength lasting until the end of February.

Pre-opening Comments for Monday December 4th

U.S. equity index futures were higher this morning. S&P 500 futures were up 18 points in pre-opening trade. Index futures are responding to passage of the U.S. tax bill by the Senate on Saturday.

Aetna gained $6.09 to $187.40 after CVS Healthcare announced a takeover of the company in a deal valued at $69 billion. Shareholders will receive $207 per share consisting of $145 per share cash and $62 per share in CVS shares. CVS slipped $0.17 to $74.95

Teck (TECK US$23.32) is expected to open lower after Citigroup downgraded the stock to hold from buy.

Broadcom added $1.74 to $273.30 after KeyBanc Capital raised its target price to $320 from $290.

Costco gained $1.71 to $186.84 after JP Morgan raised its target price to $200 from $190.

UPS added $2.19 to $122.50 after Deutsche Bank upgraded the stock to Buy from Hold. Target was raised to $135 from $125.

EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2017/12/01/stock-market-outlook-for-december-4-2017/

Note seasonality charts on the Energy sector, Canadian Employment, Canadian GDP, Canadian Dollar, PHLX Oil Service Index, Oil and Gas Equipment Index and TSX Small Cap Index

 

WALL STREET RAW RADIO – SATURDAY, DECEMBER 2, 2017 – WITH HOST MARK LEIBOVIT

GUESTS INCLUDE: DON VIALOUX (EQUITYCLOCK.COM), HENRY WEINGARTEN (AFUND.COM), ERIC HADIK (INSIIDETRACK.COM) AND SINCLAIR NOE (EATTHEBANKERS.COM).

Here is the link:

https://tinyurl.com/y9hwy39x

The Bottom Line

Most of the broadly based U.S. equity indices closed at or near all-time highs on Friday thanks to anticipation of a favourable vote on the Tax bill that was passed by the Senate on Saturday. Short term technical indicators moved higher. Seasonal influences for most world equity markets turned positive in mid-October and remain positive until the first week in January. Traditional seasonal sensitive sectors (e.g. Consumer Discretionary, Industrials, Financials and Technology) once again are leading the market higher (notably the FAANG stocks). However, medium term technical indicators for the S&P 500 Index, NASDAQ Composite Index, Dow Jones Industrial Average as well as TSX Composite Index remain overbought. Preferred strategy is to take at least partial profits on strength in seasonally attractive sector and industry equities and Exchange Traded Funds with the understanding that their next significant intermediate upside move likely will not resurface until next February.

Tax loss selling pressures in the underperforming energy, oil service and precious metal sectors are expected to continue until the second week in December. Weakness is expected to provide a buying opportunity for a seasonal trade in these sectors into spring.

Earnings News This Week

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Economic News This Week

October Factory Orders to be released at 10:00 AM EST on Monday are expected to decline 0.4% versus a gain of 1.4% in September.

October U.S. Trade Deficit to be released at 8:30 AM EST on Tuesday is expected to increase to $47.1 billion from $43.5 billion in September.

October Canadian Merchandise Trade to be released at 8:30 AM EST on Tuesday is expected to slip to a $2.9 billion deficit from a $3.2 billion deficit in September.

November ISM Services to be released at 10:00 AM EST on Tuesday are expected to slip to 59.0 from 60.1 in October.

November ADP Employment report to be released at 8:15 AM EST on Wednesday is expected to fall to 192,000 from 235,000 in October

Bank of Canada announcement on the Overnight Lending Rate is scheduled at 10:00 AM EST on Wednesday. The Rate is expected to remain at 1.0%.

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 240,000 from 238,000 last week

November Non-farm Payrolls to be released at 8:30 AM EST on Friday are expected to drop to 185,000 from 261,000 in October. November Private Non-farm Payrolls are expected to drop to 183,000 from 252,000 in October. November Unemployment Rate is expected to remain unchanged from October at 4.1%. November Hourly Earnings are expected to increase 0.3% versus no change in October.

November Canadian Housing Starts to be released at 8:15 AM EST on Friday are expected to increase to 215,000 from 222,796 in October.

December Consumer Sentiment to be released at 10:00 AM EST on Friday is expected to increase to 98.8 from 98.5 in November

 

Observations

Technical action by individual S&P 500 stocks was exceptionally bullish last week. Number of stocks breaking resistance totaled 113 while number of stocks breaking support totaled 23. Number of stocks trading in an uptrend increased to 317 from 293, number of stocks trading in a neutral trend dropped to 57 from 64 and number of stocks in a downtrend fell to 126 from 143. The Up/Down ratio increased last week to (317/126=) 2.52 from 2.05.

Economic news this week focuses on the November Employment report to be released on Friday. In Canada, focus is on the Bank of Canada’s statement on interest rates on Wednesday.

Medium term technical indicators (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) remain at intermediate overbought levels

Short term technical indicators (short term momentum, above/below 20 day moving average) for equity indices generally moved higher, but are overbought.

Seasonality on a wide variety of equity indices, commodities and sectors began to turn neutral/positive in early October and continues to improve. During the past 20 years, the S&P 500 Index and TSX Composite Index bottomed on average on October 10th. Historically, the month of November has been the strongest month of the year of the S&P 500 Index and TSX Composite and December has been one of the strongest months (mainly during the last two weeks in December).

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Earnings reports continue to trickle in this week. Another 5 S&P 500 companies are scheduled to release fiscal third quarter results.

The outlook for S&P earnings and sales remains positive. 99% had reported third quarter results by the end of last week. 74% reported higher than consensus earnings and 67% reported higher than consensus sales. Fourth quarter earnings are expected to increase 10.5% (up from 10.0% last week on a 6.4% increase in revenues (up from 6.3% last week). 71 companies have issued negative fourth quarter guidance and 36 companies have issued positive guidance. First quarter 2018 earnings are expected to increase 10.6% (up from 10.0% last week) on a 6.5% increase in revenues. Second quarter 2018 earnings are expected to increase 10.1% (down from 10.2% last week) on a 6.3% increase in revenues (down from 6.4%). Third quarter earnings are expected to increase 11.6% on a 5.4% increase in revenues. Fourth quarter 2018 earnings are expected to increase 11.2% on a 4.3 increase in revenues. For all of 2018, earnings are expected to increase 11.1% on a 5.4% increase in sales.

Short term political uncertainties remain, including North Korean “sabre rattling” and increased scrutiny by special council on Russia’s influence on the Presidential election.

Earnings and revenue prospects beyond the third quarter report season are exceptional for U.S. based companies with international exposure. Consensus for S&P 500 earnings on a year-over-year are expected to exceed 10% in the fourth quarter of 2017 and throughout 2018. Earnings will benefit significantly from weakness in the U.S. Dollar on a year-over-year basis when revenues and earnings from international operations will benefit from higher valued foreign currencies. The U.S. Dollar Index averaged 100 in the fourth quarter of 2016 and 101 in the first quarter of 2017.

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Recent tax loss selling pressures in selected sectors is setting up a buying opportunity prior to the second half of December when their period of seasonal strength normally begins. The sectors that have been under the most downside tax loss selling pressures are the energy, oil services and gold sectors. On Friday, selected stocks in these sectors broke to new highs (e.g. Chevron, Exxon Mobil, Helmrich & Payne) implying that seasonal influences may be coming sooner than normal this year.

Colin Cieszynski at www.thefundamentaltechnician.com noted the following observation on the energy sector on Friday:

I’m often asked when looking at resource plays whether the commodity price or stock prices lead. My answer is that share prices lead because energy stock earnings forecasts are based on two key forecasts, future commodity prices and future production levels. Stocks lead because they have a price forecast implicit in their valuation.

This week’s energy trading provides an excellent case in point. Following the OPEC decision to extend supply cuts to December 2018, Oil prices didn’t do very much Thursday, but energy stocks, particularly in North America, took off. Today, oil prices are playing catch-up and confirming the continuing energy stock price rally. The 2.3% rally in WTI is getting confirmation from 1.9% gains for gasoline and natural gas.

Oil services ETF (OIH $25.40) is forming a potential reverse Head & Shoulders pattern. The pattern is completed on a move above $26.27

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Gold equity ETFs continue to form base building patterns.

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Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for December 1st 2017

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Green: Increase from previous day

Red: Decrease from previous day

 

Calculating Technical Scores

Technical scores are 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.

 

S&P 500 Index gained 39.80 points (1.53%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators are trending up.

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Percent of S&P 500 stocks trading above its 50 day moving average (Also known as the S&P 500 Momentum indicator) increased last week to 78.60 from 64.60 last week. Percent remains intermediate overbought.

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Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 77.40 from 71.20. Percent remains intermediate overbought.

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Bullish Percent Index increased last week to 77.40 from 73.40 and remained above its 20 day moving average. The Index remains intermediate overbought.

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Bullish Percent Index for TSX stocks dropped last week to 66.67 from 67.47 and remained below its 20 day moving average. The Index remains intermediate overbought and trending down.

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TSX Composite Index dropped 69.11 points (0.43%) last week. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index changed last week to negative from neutral (Score: -2). The Index remains above its 20 day moving average (Score: 1). Short term momentum indicators have turned down (Score: -1). Technical score dropped last week to 0 from 4

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Percent of TSX stocks trading above their 50 day moving average (also known as the TSX Momentum Barometer) dropped last week to 53.53 from 60.83. Percent remains intermediate overbought and trending down.

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Percent of TSX stocks trading above their 200 day moving average slipped last week to 59.75 from 61.67. Percent remains intermediate overbought and trending down.

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Dow Jones Industrial Average gained 673.60 points (2.86%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to positive from neutral. The Average remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 4.

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Bullish Percent Index for Dow Jones Industrial stocks remained unchanged last week at 90.00 and remained above its 20 day moving average. The Index remains intermediate overbought.

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Bullish Percent Index for NASDAQ stocks increased last week to 63.20 from 62.63 and remained above its 20 day moving average. The Index remains intermediate overbought.

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NASDAQ Composite Index dropped 41.77 points (0.61%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed last week to negative from positive. The Index remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to 0 from 6.

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Russell 2000 Index added 17.84 points (1.17%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score last week remained at 6.

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Dow Jones Transportation Average jumped 566.43 points (5.89%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to positive from negative. The Average moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 0.

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Australia All Ordinaries Composite Index added 12.40 points (0.20%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score slipped last week to 2 from 4.

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The Nikkei Average added 268.18 points (1.19%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains neutral. The Average remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 4.

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Europe iShares dropped $0.31 (0.66%) last week. Intermediate trend changed to neutral from down on a move above $47.29. Strength relative to the S&P 500 Index remains negative. Units remain above their 20 day moving average. Short term momentum indicators have just turned down. Technical score dropped last week to -2 from 0.

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Shanghai Composite Index dropped 36.20 points (1.08%) last week. Intermediate trend remained neutral. Strength relative to the S&P 500 Index remained negative. The Index remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -4.

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Emerging Markets ETF dropped $1.87 (3.92%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from positive. Units dropped below their 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to -2 from 6.

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Currencies

The U.S. Dollar Index slipped 0.27 (0.29%) last week. Intermediate trend remains up. The Index dropped below its 20 day moving average. Short term momentum indicators are trending down.

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Euro slipped 0.29 90.24%) last week. Intermediate trend remained neutral. The Euro remained above its 20 day moving average. Short term momentum indicators are trending up.

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Canadian Dollar added US 0.03 cents (0.04%) last week. Intermediate trend remains neutral. The Canuck Buck moved back above its 20 day moving average on Friday on favourable economic news. Short term momentum indicators have turned up.

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Japanese Yen dropped 0.46 (0.51%) last week. Intermediate trend remains up. The Yen remains above its 20 day moving average. Short term momentum indicators are trending down.

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British Pound added 1.46 (1.10%) last week. Intermediate trend remains up. The Pound remains above its 20 day moving average. Short term momentum indicators are trending up.

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Commodities and Related ETFs

Daily Seasonal/Technical Commodities Trends for December 1st 2017

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Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

 

The CRB Index dropped 1.53 points (0.80%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from neutral. The Index dropped below its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to-2 from 4.

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Gasoline dropped $0.04 per gallon (2.25%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from neutral. Gas dropped below its 20 day moving average. Short term momentum indicators have turned down. Score dropped to -2 from 4

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Crude Oil slipped $0.59 per barrel (1.00%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. Crude remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score slipped last week to 4 from 6.

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Natural gas gained 14.4 per MBtu (4.94%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains neutral. “Natty” dropped below its 20 day moving average. Short term momentum indicators have turned up. Technical score remained last week at 2.

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S&P Energy Index gained 13.39 points (2.68%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to neutral from negative. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 0.

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Oil Services Index gained 6.26 points (4.76%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains neutral. The Index moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.

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Gold dipped $5.00 per ounce (0.39%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed from neutral to negative. Gold moved below its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to -2 from 4.

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Silver dropped $0.60 per ounce (3.53%) last week. Intermediate trend changed to down from neutral on Friday on a move below $16.34. Strength relative to the S&P 500 Index changed to negative from neutral. Silver remained below its 20 day moving average. Technical score dropped last week to -6 from 0.

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AMEX Gold Bug Index dropped 2.33 points (1.24%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to negative from neutral. The Index moved below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -6 from 2.

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Platinum dipped $4.70 per ounce (0.50%) last week. Trend remains neutral. Relative strength remains neutral. Remains above its 20 day MA. Momentum: up. Score remained at 4.

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Palladium gained $22.55 per ounce (2.27%) last week. Trend remains up. Relative strength changed to neutral from positive. Remained above its 20 day MA. Momentum: Up

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Copper dropped $0.08 per lb. (2.52%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to negative from neutral. Copper moved below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -6 from 0.

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BMO Base Metals ETF dropped $0.35 (2.95%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. Units dropped below their 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to -6 from -2.

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Lumber added $14.70 (3.49%) last week. Trend remains up. Relative strength remains negative. Remains below its 20 day MA. Momentum just turned higher. Score increased to 0 from -2

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Grain ETN added $0.33 (1.32%) last week. Trend remains down. Relative strength remains negative. Units moved above their 20 day MA on Friday. Momentum turned up. Score:-2

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Agriculture ETF added $0.43 (0.71%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. Units remain above their 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

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Interest Rates

Yield on 10 year Treasuries gained 2.2 basis points (0.94%) last week. Intermediate trend remains up. Yield trades above its 20 day moving average. Short term momentum indicators are trending up.

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Price of the long term Treasury Bond ETF slipped $0.35 last week. Intermediate trend remains up. Price remains above its 20 day moving average.

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Volatility

The VIX Index spiked on Friday, but settled back to a gain of 1.78 (18.45%) last week. The Index moved above its 20 day moving average.

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Sectors

Daily Seasonal/Technical Sector Trends for December 1st 2017

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Green: Increase from previous day

Red: Decrease from previous day

 

StockTwits Released on Friday @EquityClock

Canada GDP higher by 5.0% (NSA) in September, slightly above 4.8% average increase for month. #CDNecon #CAD $MACRO

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Canada Employment essentially unchanged (NSA) in November, a divergence compared to average decline of 0.4%. $MACRO

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Seasonally, the best month of the year for stocks is ahead. equityclock.com/2017/11/30/… $SPX $SPY $ES_F

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Chevron $CVX, a Dow Jones Industrial stock moved above $119.79 to an all-time high extending an intermediate uptrend.

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Exxon Mobil $XOM, a Dow Jones Industrial stock moved above $83.47 extending an intermediate uptrend.

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Verizon $VZ, a Dow Jones Industrial stock moved above $51.18 extending an intermediate uptrend.

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Tech action by S&P 500 stocks to 10:00: Bullish. Breakouts: $TIF $CVX $HP $WMB $XOM $ABBV $AMGN $VZ. No breakdowns.

Tiffany $TIF moved above $91.56 on better than consensus earnings resuming an intermediate uptrend.

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Canadian Pacific $CP.CA, a TSX 60 stock moved above $225.84 to 30 month high extending an uptrend.

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Oil service stocks such as $HP starting to break out. ‘Tis the season starting in mid-December!

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Pfizer $PFE, a Dow Jones Industrial stock moved above $36.45 to all-time high extending an intermediate uptrend.

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Alphabet $GOOGL moved below $1,023.33 completing a double top pattern.

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VIX Index $VIX spikes on tax cut vote delay and Flynn concerns.

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Toromont Industries $TIH.CA moved below $55.09 extending an intermediate downtrend.

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Russia ETF $RSX moved below $21.35 extending an intermediate downtrend.

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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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3 Responses to “Tech Talk for Monday December 4th 2017”

  1. Dee Says:

    Harry#47 Nov.30,

    Advfn.com gives tsx realtime quotes. Freestockcharts.com gives US realtime quotes.
    I have been using both for years.

    Happy Trading!

  2. Rol Lew Says:

    Dee, can you send me your layout for freestockcharts? This is what I use

    http://www.freestockcharts.com?emailChartID=d6b9a009-398d-42c0-b055-b521edd7406a

    I am not familiar with adv.fn. Can You save stocklist(s) to it, as with freestockcharts?

  3. Harry Says:

    Thanks Dee, I decided to subscribe for one more year. Thank you again.

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