Tech Talk for Wednesday January 31st 2018

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Pre-opening Comments for Wednesday January 31st

U.S. equity index futures were higher this morning. S&P 500 futures were up 12 points in pre-opening trade.

Index futures maintained gains following release of the January ADP employment report at 8:15 AM EST. Consensus was an increase of 195,000 versus 242,000 in December. Actual was 234,000.

The Canadian Dollar added to overnight gains to US 81.54 cents following released of Canada’s November GDP report released at 8:30 AM EST. Consensus was an increase of 0.4% versus no change in October. Actual was an increase of 0.4%.

Fourth quarter reports continue to pour in. Companies that reported since yesterday’s close included Avery Dennison, Boeing, Broadcomm, DR Horton, Electronic Arts, Eli Lilly, Ingersoll-Rand, McDonalds, Pitney Bowes, Thermo Fisher and Tupperware.

Foot Locker added $1.70 to $51.60 after Oppenheimer and Cowen raised their target price on the stock.

Travelers (TRV $148.72) is expected to open higher after MKM Partners raised their target price to $150 from $135.

Canadian oil sand stocks are expected to open lower after the British Columbia government moved to block construction of the Trans Mountain pipeline expansion.

EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/01/30/stock-market-outlook-for-january-31-2018/

See seasonal charts on Case Shiller 20 City Price Index

 

Observations

An additional spike in volatility! The spike was triggered by a downward shift in short term momentum in equity indices, commodities and sectors. The VIX Index reached a 5 month high.

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VXN closed at a 15 month high.

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StockTwits released yesterday @EquityClock

Technical action by S&P 500 stock to 10:00: Bearish. Breakout: $HRS. Breakdowns: $PHM $MET $MNK $AAPL $GLW $IFF $ARE.

Editor’s Note: After 10:00, no breakouts. Breakdowns: PWR and BEN

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Cdn. “gassy” stocks continue to move lower despite higher U.S. natural gas prices. Cdn. companies don’t benefit. $BNP.CA

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Thomson Reuters $TRI.CA, a TSX 60 stock popped above $57.50 on confirmation of negotiations with Blackstone.

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Magna Internationals $MG.CA, a TSX 60 stock moved below $70.70 completing a double top pattern.

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Corn ETN $CORN moved above $17.15 extending its double bottom pattern.

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Case-Shiller reporting that home prices increased by 0.2% (NSA) in November. Average change: -0.3% #Housing #Economy $MACRO

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Trader’s Corner

Note the significant momentum shift for a wide variety of indices, commodities and sectors.

Daily Seasonal/Technical Equity Trends for January 30th 2018

spx jan 30

Green: Increase from previous day

Red: Decrease from previous day

 

Daily Seasonal/Technical Commodities Trends for January 30th 2018

crb jan 30

Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

 

Daily Seasonal/Technical Sector Trends for January 30th 2018

xlk jan 30

Green: Increase from previous day

Red: Decrease from previous day

 

S&P Momentum Barometer

The Barometer dropped another 3.80 to 76.40 yesterday. It remains intermediate overbought and has turned down.

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TSX Momentum Barometer

The Barometer dropped another 6.58 to 39.92 yesterday. It remains intermediate neutral and trending down.

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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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22 Responses to “Tech Talk for Wednesday January 31st 2018”

  1. rick Says:

    Canada – USA last 10 years

    TSX 22 % gain – SPX 108 % gain

    Consumer price index in Canada 1,6 % per year in average for a 17,2 % total in 10 year =
    real gain in TSX — 22-17 = 5 % gain only in real terms .

    In top of that = Canadian Dollar down 19 % against US Dollar in last 10 years !

    Why investors should keep their capital in Canadian Economy and Canadian Stocks and Canadian Dollars ?

    How about next 10 years ?

    In USA lower taxes ( income tax and corporations tax and consumer tax are lower and prices are lower in general ) , lower deregulations .
    In Canada higher taxes ( all of them ) and higher regulations .

    Where do you think TSX will be in 10 years and where SPX will be ?
    How about Canadian Dollar comparative with US Dollar ?

  2. bruce Says:

    Hi Sherri
    Could we have Armstrong’s latest please?…..tnx…

  3. Sherri Says:

    Bruce!! just for you from the “Wet” Coast at an ungodly hour of the morning……….

    Armstrong DOW update:

    “We have warned that the turning points were November, January, and March. If we exceeded the November high, then a run-up into January was likely. Now we have reached the period at where a turning point has arrived. The Weekly Bearish lies at 24696 and now that everyone is starting to get bullish, we reach the point where the market can toy with them or simply run away to the upside. Keep in mind that toying with everyone here in 2018 will be a sign of extending the duration of this bull market which is a reflection of what is unfolding on the Sovereign Debt Crisis in conjunction with the Monetary Crisis Cycle.

    We wrote: “In the US Share Market, this is now a turning point we have reached. I have warned for months that exceeding the November high would lead to a January high. Now, the failure of February to make new highs warns of a March low. The support for a correction now lies at the 25637 level on a weekly closing basis (this is not a reversal). We will elaborate today on the Private Blog.”

    Indeed, this is the 3 week moving average of the lows which lies at 25637 and is above the Weekly Bearish Reversals. This means it can be easily faded. We still must look to the Reversals to guide us as to any correction on a sustainable basis.

    We have elected one Daily Bearish Reversal so far and the next lies at 25941 followed by 25307. A serious correction would only be indicated by a closing for January below the December low of 23921.90. Nevertheless, a closing for January below 25678 will also signal a brief correction is possible.

    We have turning points coming into play the weeks of 02/12 and 02/26.

    A low this week can still be followed by a bounce into the week of 02/12 and then down again into 02/26.

    The market will either scare everyone, or run away to the upside. The only fundamental that will matter is confidence and that will turn around the Impeachment issue. There are still Republicans hell bent on destroying the Trump Presidency and at the top of the list is Lindsey Graham. This is the guy with the rumors in Washington that he allegedly flies often to Paris where he has his homosexual lover stashed away and if that was ever proven to be True, South Carolina would send him packing his bags real fast. Barney Frank was gay, but representing Massachusetts was acceptable because the people knew it. South Carolina tends to be a strict religious state and that would not be acceptable.

    Lindsey Graham is also against Trump on Global Warming and says he should join the Paris Accord. This has been a very dangerous guy and he is also the author of allowing citizens to be imprisoned without lawyers or trials if the government even accuses you of being associated with terrorists. Denied a lawyer or a trial means you cannot challenge what the government accuses you of doing in the first place. He is a very evil person who I rank as completely distrustful. “

  4. Larry/ON Says:

    Rick – Thank you for the synopsis. I agree completely. I made what amounts to a complete switch into US equities in 2015 after Trump was elected.

  5. Larry/ON Says:

    Excuse me 2016.

  6. Larry/ON Says:

    Things were going too good for me and now I got a slap upside the head on AAPL and TXN. The worst thing in trading/investing is to take bigger risks when you succeed on on something. Chances are that you eventually get a comeuppance. Gotta be disciplined, review your plan regularly and not get too caught up in short-term moves.
    AMZN – Just continues to amaze me – I forced myself to buy over the last month and in the two-day downturn that just occurred rather that being weak on risk off days it was the best performer.

  7. Mick/NV Says:

    Rick

    You are correct in your performance numbers, however, an index is not a portfolio, it is how one allocates their assets that determines performance over time. Even if one held mostly cdn assets doesn’t mean the performance will be equal or less than the TSX, in many cases it can be more. Here are some performance numbers for stocks that have been mentioned here recently. In the first chart, both t.to and fts.to have outperformed the tsx and s&p.

    http://stockcharts.com/h-sc/ui?s=T.TO&p=D&yr=10&mn=0&dy=0&id=p33517620051

    In the second chart, even trp.to which is at a 52 week low, has outperformed the s&p, cnq.to has not come close, but still well ahead of the tsx. If ones portfolio was comprised of similar type of stocks such as cve.to, eca.to etc., I suspect the overall performance would not have done well, those last 2 stocks are down over 40% during the past 10 years, keeping in mind that eca.to split into cve.to near the end of 2009.

    http://stockcharts.com/h-sc/ui?s=TRP.TO&p=D&yr=10&mn=0&dy=0&id=p20565257820

    Of course the last example is with the cdn banks, well ahead of the s&p. All this numbers include dividends and most of these companies have increased their dividends over time, which suggests their business’s have done well the past 10 years.

    http://stockcharts.com/h-sc/ui?s=RY.TO&p=D&yr=10&mn=0&dy=0&id=p81436128507

  8. Larry/ON Says:

    Cdn Banks vs. US Banks: Mick/NV take the best performing bank TD and pit it against BAC,JPM,MS and KBE (bank index). I only have five year charts but they all outperform the best Cdn bank.

  9. Mick/NV Says:

    Larry/On

    It is difficult to compare the U.S. to Cdn banks over the 10 year period simply because of the issues during the financial crisis with the U.S. banks, although that should say something about the stability of the cdn banks. here is the 10 yr chart

    http://stockcharts.com/h-sc/ui?s=TD&p=D&yr=10&mn=0&dy=0&id=p50807261040

    Here is another comparison, with JPM clearly outperforming

    http://stockcharts.com/h-sc/ui?s=TD&p=D&yr=10&mn=0&dy=0&id=p47965774129

    And the last one, WFC outperforming the cdn banks but not by a wide margin over TD.

    http://stockcharts.com/h-sc/ui?s=TD&p=D&yr=10&mn=0&dy=0&id=p17332615339

    I did own WFC at one time, but sold sometime before the credit card issue problem they had. I prefer the stability of the cdn banks and their dividend increases, others may not.

  10. Bernie Says:

    Rick & Mick/NV,

    Re: #1 & #7
    I get your point but Mick/NV is right, ones return is dependent upon what they are invested in. Not all of us are invested in country equity indexes. My DGI stocks portfolio has varied from 50% Cdn/45% U.S/5% UK to 70% Cdn/30% U.S. since initiation. Out of curiosity I calculated my 10 year total return (2008 thru 2017).
    DGI Portfolio 10 Year absolute return = 150.09%
    DGI Portfolio 10-Yr absolute return (without new money added in) = 136.44%

    Past performance does not dictate future performance but, in hindsite, had I been invested 100% in an investable SPX index fund I would have left a lot of money on the table. And, for sure, my dividend growth would have been abysmal.

  11. Larry/ON Says:

    Mick/NV – You are right. The US banks got trashed with the financial crisis 10 years ago. The point is that they now outperform Canadian banks over the past five years and will outperform going forward. Growth prospects, deregulation, greater interest rate hikes, tax cuts, all add up to a better environment. At some point in the future there may be another US banking crisis due to the looser banking environment but we are talking years away.

  12. Larry/ON Says:

    To add. If you put up a five year chart it will look completely different.

  13. rick Says:

    Mick/NV , Bernie ,

    I compared a broad based Canadian index TSX that represent Canadian economy all together
    with a broad based American index SPX that represent American economy .

    You compare apples with oranges : the best Canadian individual stocks with an American index SPX .

    If you want to compare something than compare BEST Canadian stocks with BEST American stocks :
    Check AAPL, GOOGL , AMZN , FB , NVDA , MSFT , NFLX , TSLA , HD , BA , V , MA

  14. rick Says:

    The idea is that Canadian economy is bad and is going worse comparative with American economy which is good and is going better .
    And I showed you the numbers TSX 22 % and SPX 108 % and Canadian $ going down 19 % .
    The problem : Canadian politicians are increasing taxes and regulations comparative with American politicians who lowered taxes and regulations .
    That will damage Canadian economy even more in next 10 years .

    Canadian premier is a populist politician with zero value in economics comparative with American president who is maybe a bad politician but a way , way better businessman than our drama teacher .
    When Canadians politicians are taking popular decisions but bad economic decisions = will destroy the economy and affect all of us .
    Words ( and politicians ) can lie but numbers are telling the truth .

  15. Sandra Says:

    Copper zinxed ever since pullback of copper futures from 3.29.
    Anybody has idea where it is heading?

  16. bruce Says:

    Hi Sherri
    thanks for the update from bitterly cold Calgary…..

  17. Paula Says:

    At month end, I do an update on monthly charts. Here is XGD.TO. No trend but maybe a bounce is possible.

    http://stockcharts.com/h-sc/ui?s=XGD.TO&p=M&b=5&g=0&id=p19995260502&a=574826267

    NTR – a spectacular full moon tonight, if you can see it.

    http://earthsky.org/tonight/super-blue-moon-eclipse-on-january-31

  18. Neil/Ab Says:

    Rick et al
    Interesting discussion. I would side with Rick on the argument, though a couple of points should be made.
    S&P outperformance began in January 2012 and appears to have widened each year since.
    Of course, in 2012 Canada had a conservative federal government while the U.S. has a democrat in power. While it is true that the gap has widened substantially over the last year or so, it was widening for years before that. Indeed 4 of the 6 underperforming years were with Harper in power. So, to me, it is probably too simplistic to blame or give credit to any one political leader.
    Also, I would suspect that at least some of the relative underperformance over the last few years is because of the weighting oil and gas companies have in our index as compared to the U.S.
    Thus, while it MAY be that politics plays some undefined role in all this, it would be too big a leap to suggest it being the cause. And, if you cannot identify it as being the cause, prognosticating the next ten years based on political/economic ideologies and the relative performance is simply guessing.

  19. Bernie Says:

    Rick,

    I wasn’t disputing anything you said. There is no doubt the U.S. index is outperforming the Canadian index in recent times and probably for several more years to come. For sure Trudeau is in over his head and is getting his lunch handed to him by Trump.

    I didn’t compare the “best” Canadian stocks to the SPX. I merely indicated I outperformed the U.S. marker over the past 10 years with my portfolio of mostly Canadian dividend stocks. Mick’s examples were stocks he owns, he wasn’t cherry picking anything. We’re saying an investor doesn’t necessarily have to own only U.S. stocks or its index to outperform.

  20. Bernie Says:

    Neil/Ab,

    Re: #18
    Yes the S&P 500 has outperformed the TSX since 2012 but it hasn’t widened “every” year. The TSX index won out 21.1% to 8.6% in 2016 (in $CAD), but yeah, they slaughtered us every other year. Not a happy period for Canadian index investors.

  21. Sherri Says:

    From the “Wet and tryin to snow” Coast, Armstrong update tonight:

    “QUESTION: Your minimum target was 25000-28000 and that has been reached and on the time you gave. Do you think this is the final high?

    ANSWER: There is no indication that we are dealing with a final major high as of yet. All we may be doing is extending the cycle out even further. As I wrote back in 2014, this level was the “MINIMUM” target and to match 1929 we would need to reach 39,482. We have exceeded the time length of the bull market for the ’20s, 97 months, but we have not reached excessive levels in price.

    A Weekly Bearish will confirm a consolidation for now into mid February ideally until the week of the 19th. Thereafter, we may once again see a trend unfold.

    Oct 2014 – This may be what we are facing. Instead of a Phase Transition that doubles the Dow Jones from the 2009 low of 6,440 (12,000), which we have already achieved, we are looking at a rally into 2017-2018 with the Dow reaching the 25,000-28,000 level. That would be the minimum target objective. To match the rally between 1921 and 1929, the Dow would need to reach 39,482. We have been looking at a 4.3 rally (430%) which is half the 8.6 year frequency.”

  22. Ron/BC Says:

    BMO.to broke out above its March/17 high of 101.33 and ran up to $104.59. Price has now pulled back to that exact breakout price point and closed today at $101.33. This pullback needs to hold here for a successful test of this price level to see higher prices ahead.

    http://stockcharts.com/h-sc/ui?s=BMO.TO&p=D&yr=2&mn=0&dy=0&id=p24678083784&a=568088253

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