Tech Talk for Monday April 16th 2018

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Pre-opening Comments for Monday April 16th

U.S. equity index futures were higher this morning. S&P 500 futures were up 15 points in pre-opening trade.

Index futures were virtually unchanged following release of economic news released at 8:30 AM EDT. Consensus for March Retail Sales was an increase of 0.4% versus a decline of 0.1% in February. Actual was an increase of 0.6%. Excluding auto sales, consensus for March Retail Sales was an increase of 0.2% versus a gain of 0.2% in February. Actual was an increase of 0.2%. Consensus for April Empire State Manufacturing Survey was a slip to 18.2 from 22.5 in March. Actual was 15.8.

Bank of America added $0.26 to $30.06 after reporting higher than consensus first quarter earnings.

National Oilwell Varco dropped $2.17 to $38.75 after reporting lower than consensus first quarter revenues.

Costco gained $2.09 to $191.00 after Wells Fargo upgraded the stock to Outperform from Market Perform.

McDonalds slipped $0.78 to $160.95 after Stephens downgraded the stock to Equal Weight from Overweight.

EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/04/13/stock-market-outlook-for-april-16-2018/

Note seasonality charts on the U.S. Financial sector, Commercial & Industrial Loans, Job Openings, Home Furnishings and TSX Utilities

Wall Street Raw with Mark Leibovit

APRIL 14, 2018

https://tinyurl.com/y8bmelf8

GUESTS INCLUDE DON VIALOUX (EQUITYCLOCK.COM),   SINCLAIR NOE (EATTHEBANKERS.COM) AND ARCH CRAWFORD (CRAWFORDPERSPECTIVES.COM).

The Bottom Line

Technical action by North American equity markets returned to positive last week April historically has been the second strongest month in the year, second only to December.

This is the time of year when favourable seasonal influences are triggered by encouraging corporate news released with first quarter reports at annual meetings. Chief executive officers love to give good news to shareholders at annual meetings. Results to date have been positive: 70% of reporting S&P 500 companies have beat consensus earnings and 73% have beat consensus revenues. Responses to first quarter earnings reports released during the past three weeks (except for reports by major banks on Friday) have been positive. Look for more of the same this week. First quarter earnings by S&P 500 companies are expected to increase 17.3%. Look for news on dividend increases and share buybacks.

The energy sector continues to show encouraging seasonal strength. Seasonal strength for the sector is from mid-March to mid-June. Natural gas inventories remain well below their five year average setting the stage for a significant recovery into spring. A move above the $2.81 U.S. per MBtu level will attract technical buying on both sides of the border. Western Canada Select (Oil sands oil) prices moved sharply higher again last week. Preferred strategy is to own energy stocks and related ETFs on both sides of the border.

Prospects beyond the end of April become increasingly murky. Negative political influences on North American equity markets during a U.S. mid-term election year are strongest between May and October. This year, investors will focus on the possibility of a change in control in the House of Representatives and Senate. The Republicans currently have a slim majority in both legislative bodies.

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Economic News This Week

March Retail Sales to be released at 8:30 AM EDT on Monday are expected to increase 0.4% versus a decline of 0.1% in February. Excluding auto sales, March Retail Sales are expected to increase 0.2% versus a gain of 0.2% in February.

April Empire State Manufacturing Survey to be released at 8:30 AM EDT on Monday is expected to slip to 18.2 from 22.5 in March.

February Business Inventories to be released at 10:00 AM EDT on Monday are expected to increase 0.6% versus a gain of 0.6% in January.

March Housing Starts to be released at 8:30 AM EDT on Tuesday are expected to increase to 1.27 million units from 1.236 million units in February

March Industrial Production to be released at 9:15 AM EDT on Tuesday is expected to increase0.3% versus a gain of 0.9% in February. March Capacity Utilization is expected to slip to 77.9% from 78.1% in February.

Bank of Canada announced its interest rate policy at 10:00 AM EDT on Wednesday. Lending rate to major banks is expected to remain at 1.25%.

Beige Book is released at 2:00 PM EDT on Wednesday

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to drop to 226,000 from 233,000 last week.

April Philly Fed Report to be released at 8:30 AM EDT on Thursday is expected to slip to 20.1 from 22.3 in March.

March Leading Economic Indicators to be released at 10:00 AM EDT on Thursday are expected to increase0.2% versus a gain of 0.6% in February.

March Canadian Consumer Price Index to be released at 8:30 AM EDT on Friday is expected to increase 0.4% versus a gain of 0.6% in February.

February Canadian Retail Sales to be released at 8:30 AM EDT on Friday are expected to increase 0.5% versus a gain of 0.3% in January.

 

Earnings News This Week

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Observations

Technical action by individual S&P 500 stocks was quietly bullish last week. Number of stocks breaking resistance totaled 27 while number of stocks breaking support totaled 8. The Up/Down ratio was increased last week (196/251=) 0.78 from 0.74.

U.S. economic news this week will focus on Retail Sales, Housing Starts and Leading Economic Indicators

Canadian economic news will focus on the Bank of Canada’s statement on interest on Wednesday

Earnings news ramps up this week: 60 S&P 500 companies are scheduled to release results (including seven Dow Jones Industrial companies).

Medium term technical indicators in the U.S. (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) increased last week and resumed an upward trend.

Medium term technical indicators in Canada also moved higher last week.

Short term technical indicators for U.S. and Canadian equity markets, commodities and most sectors (20 day moving averages, short term momentum) moved higher last week

Seasonal influences returned to normal last week. Seasonal influences on a wide variety of U.S. and Canadian equity indices and economic sensitive sectors tend to show strength starting near the beginning of March and continuing to early May. See charts below:

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The outlook for S&P 500 earnings and sales remains positive: According to FactSet, estimates for 2018 were slightly higher last week. First quarter 2018 earnings are expected to increase 17.3% (up from 17.2% last week) on a 7.4% increase in sales (up from 7.3% last week).Sixty more companies are scheduled to report this week. Second quarter 2018 earnings are expected to increase 19.0% on a 7.8% increase in sales. Third quarter earnings are expected to increase 20.9% on a 6.5% increase in sales. Fourth quarter 2018 earnings are expected to increase 17.1% on a 5.6% increase in revenues. For all of 2018, earnings are expected to increase 18.4% on a 6.7% increase in sales.

Short term political uncertainties remain, including North Korea threats, NAFTA negotiations, rising trade war fears (particularly against China) and increased scrutiny by special council on Russia’s influence on the Presidential election.

Earnings and revenue prospects for 2018 are exceptional for U.S. based companies with international exposure. Consensus for S&P 500 earnings on a year-over-year are expected to increase 18.4% in 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 are translated into U.S. Dollars. For example, a U.S. based company with 50% of its earnings and revenues coming from international operations will see earnings and revenues increase by 7.0% from foreign currency translation alone following the current 14.0% fall in the U.S. Dollar Index from its high at 103.82 in January 2017. 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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Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for April 13th 2018

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Green: Increase from previous day

Red: Decrease from previous day

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 51.83 points (1.99%) last week. Intermediate trend remains down. Short term momentum indicators are trending up. The Index moved above its 20 day moving average.

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Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 41.20 from 26.60. Percent has moved to intermediate neutral from intermediate oversold and is trending higher.

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Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 56.80 from 52.60. Percent remains intermediate neutral.

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Bullish Percent Index for S&P 500 stocks increased to 47.40 last week from 41.00 and moved above its 20 day moving average. The Index continued to trend higher.

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Bullish Percent Index for TSX Composite stocks increased last week to 56.00 from 55.60, but remained below its 20 day moving average.

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TSX Composite Index gained 66.56 points (0.44%) last week. Intermediate trend remains Neutral (Score:0). Strength relative to the S&P 500 Index remains Neutral (Score: 0). The Index remains below its 20 day moving average (Score:-1). Short term momentum indicators are trending up (Score: 1). Technical score remained last week at 0.

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Percent of TSX stocks trading above their 50 day moving average increased last week to 51.85 from 42.56. Percent is intermediate Neutral and trending up.

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Percent of TSX stocks trading above their 200 day moving average increased last week to 46.50 from 41.74. Percent remains intermediate Neutral and trending up.

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Dow Jones Industrial Average gained 427.38 points (1.79%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. The Average moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.

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Bullish Percent Index for Dow Jones Industrial stocks increased last week to 53.33 from 46.47 and moved above its 20 day moving average. The Index is intermediate Neutral and trending up.

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Bullish Percent Index for NASDAQ Composite stocks increased last week to 55.68 from 52.53, but remained below its 20 day moving average.

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NASDAQ Composite Index gained 191.54 points (2.77%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. The Index moved back below its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score remained last week at 0.

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Russell 2000 Index gained 36.21 points (2.39%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.

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Dow Jones Transportation Average added 223.12 points (2.20%) last week. Strength relative to the S&P 500 Index remained Neutral. The Average moved back above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last at 0.

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Australia All Ordinaries Composite Index added 37.80 points (0.64%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Neutral. The Index remained below its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at -2.

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Nikkei Average added 211.22 points (0.98%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. The Average remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.

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Europe iShares gained $1.08 (2.31%) last week. Intermediate trend remains down. 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 2.

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Shanghai Composite Index increased 27.94 points (0.89%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Neutral. The Index remains below its 20 day moving average. Short term momentum indicators turned up. Technical score increased last week to -2 from -4.

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Emerging Markets iShares added $0.50 (1.06%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Neutral. Units remained below their 20 day moving average. Short term momentum indicators are trending up. Technical score slipped last week to 0 from 2.

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Currencies

The U.S. Dollar Index slipped 0.28 (0.31%) last week. Intermediate trend remains down. The Dollar slipped below its 20 day moving average. Short term momentum indicators are trending down.

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The Euro added 0.53 (0.43%) last week. The Euro moved above its 20 day moving average. Short term momentum indicators are trending up.

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Canadian Dollar added US1.03 cents (1.32%) last week. Intermediate trend remains down. The Canuck Buck remained above its 20 day moving average. Short term momentum indicators are trending up.

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Japanese Yen dropped 1.41 (1.51%) last week Intermediate trend remains up. The Yen remains below its 20 day moving average. Short term momentum indicators are trending down.

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British Pound added 1.53 (1.09%) last week. Intermediate trend remains up. The Pound remained 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 April 13th 2018

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Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

CRB Index gained 7.07 points (3.68%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Index moved above its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 6 from 2.

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Gasoline gained $0.12 per gallon (6.15%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Index moved back above its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 6 from 2.

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Crude Oil gained $5.33 per barrel (8.59%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Crude moved back above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 2.

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Natural Gas added $0.03 per MBtu (1.11%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remained Positive. “Natty” moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increase last week to 2 from 1.

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S&P Energy Index gained 29.95 points (6.02%) last week. Intermediate trend changed to up from down on a move above 513.86. Strength relative to the S&P 500 Index remained Positive. The Index remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 2.

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Philadelphia Oil Services Index gained 14.67 points (10.75%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Index moved 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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Gold added $11.80 per ounce (0.88%) last week. Intermediate trend changed to up from down on a move above $1365.40. Strength relative to the S&P 500 Index remains Positive. Gold remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 2.

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Silver gained $0.30 per ounce (1.83%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. Silver moved back above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.

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AMEX Gold Bug Index gained 5.84 points (3.29%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Index remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

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Platinum gained $15.60 per ounce (1.70%) last week. Trend remains down. Relative strength improved to Neutral. PLAT remains below its 20 day MA. Momentum: Up.

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Palladium added $85.20 per ounce (9.58%) last week. Trend remains down. Relative strength improved to Neutral. PALL moved above its 20 day MA. Momentum turned up.

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Copper added 1.2 cents per lb. (0.39%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. Copper remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.

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BMO Base Metals ETF gained $0.36 (3.20%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Negative. Units moved above their 20 day moving average. Short term momentum indicators are trending up. Technical score increase last week to 0 from -4.

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Lumber dropped $9.40 (1.75%) last week. Trend remains up. Relative strength remains Positive. Lumber remains above its 20 day MA. Short term momentum indicators turned down.

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Grain ETN added $0.02 (0.07%) last week. Trend remains up. Relative strength remains Positive. Units remained above their 20 day moving average. Momentum turned down.

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Agriculture ETF gained $1.50 (2.48%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Units moved above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 4.

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Interest Rates

Yield on 10 year Treasuries increased 5.4 basis points (1.95%) last week. Intermediate trend remains down. Short term momentum indicators are trending up. Yield moved back above its 20 day moving average.

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Price of the long term Treasury ETF slipped $0.20 (0.17%) last week. Intermediate trend remains down. Units remained above their 20 day moving average.

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Volatility

The VIX Index dropped 4.07 (18.95%) last week. The Index moved below its 20 day moving average. Short term momentum indicators are trending down.

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Sectors

Daily Seasonal/Technical Sector Trends for April 13th 2018

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Green: Increase from previous day

Red: Decrease from previous day

 

StockTwits Released on Friday @EquityClock

#Loan growth exhausted following years of easy monetary policy. equityclock.com/2018/04/13/… $STUDY $XLF $KBE

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Job Openings down 4.2% (NSA) in February, much better than 8.2% average decline. #JOLTS #Employment #Economy $MACRO

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Technical action by S&P 500 stocks to 10:15: Quiet. Breakout: $FFIV. Breakdown: $K

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Selected Canadian gold stocks have moved above recent trading ranges: $IMG.CA $SMF.CA

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Another gold stock breakout! Newmont $NEM moved above $41.89 extending an intermediate uptrend.

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Canadian Bank ETF $ZEB.CA moved below $27.88 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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6 Responses to “Tech Talk for Monday April 16th 2018”

  1. Bernie Says:

    Ron/BC

    Wow, quiet day. Any word back from Questrade on your queries?

  2. Ron/BC Says:

    Bernie
    WOW, you must be psychedelic or something as I was just thinking of you and Questrade,lol. I had phoned him and left him a message and emailed him. He was off sick for a few days. So he phoned me today and told me while they do charge $9.95 for a Mutual Fund Trade they refund the Trailing Fee unlike most Fund sales that you don’t see as it is mixed in with the MER apparently. I’ll post the link here as it’s Greek to me of course. He said to review their Mutual Fund Maximizer service. Let me know what you think of it as wading through this stuff is beyond my capacity. As far as low currency exchange fees he said the ‘team’ is reviewing the idea but that it takes some time to change policies.

    http://www.questrade.com/trading/services/mutual_fund_maximizer

  3. Bernie Says:

    Ron/BC,

    Psychedelic? Well, I did own a paisley shirt and bell bottom jeans in my youth and there are a fair number of hippies kicking around here in Nelson. Does that count? I know what you meant, I’m not that either. LOL

    It’s great that Questrade refunds mutual fund trailer fees. The drawback here is Mawer doesn’t have any so there is nothing to refund but, sadly, you’re still stuck with $9.95 commissions…unless something else could be worked out.

    The following per Mawer:
    “Mawer is pleased to offer 13 mutual funds that meet a wide variety of investment needs and risk profiles. Our funds offer no-load investing—no sales or trailing commissions, no set-up fees, and no purchase, transfer, or redemption fees. Our Management Expense Ratios (MERs) are among the lowest in Canada.”

  4. Bernie Says:

    Ron/BC,

    In reading the literature per your link it appears there is yet another fly in Questrades ointment with regards to fees they charge you. I really don’t like the following Q&A per their “Other Fees” on mutual funds:

    “Are there any other fees?

    There is a monthly processing fee of $29.95. At the close of every quarter, Questrade determines your eligible trailer rebates, subtracts the total processing fee for the quarter, and then rebates the remainder into your account. This processing fee is never charged to your account, so if your rebate is less than the quarterly charge, there is no additional payment.”

  5. Ron/BC Says:

    Bernie
    Well I’m sure you understand it better than I could. But Questrade’s MER is .7% and MAWER’s MER is 1.13% to 1.76% for the major funds listed, so as far as fees go I think Questrade has lower overall fees. I don’t care about $9.95 now and again but do care about higher percentages of my funds every year. I’ve learned even a slight change in percentage pts makes a big difference in the balance over time. Especially when it’s done every year. I guess that’s why I don’t tend to hold funds.

  6. Bernie Says:

    Ron/BC,

    I don’t put much stock into MERs unless the comparisons are with securities of similar holdings. With funds I prefer to look at performance firstly and holdings secondly. Questrade’s portfolios do have lower MERs than Mawer’s funds but they trail considerably in performance returns and they appear to hold a much greater Canadian content than I want in this kind of vehicle. It is nice you can buy/sell these with no commissions but this feature wouldn’t add much to the performance numbers. If low fees are important to you have you looked at Vanguard’s offerings?

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