Tech Talk for Friday April 27th 2018

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Pre-opening Comments for Friday April 27th

Dow Jones Industrial and S&P 500 futures were lower this morning. S&P 500 futures were down 4 points in pre-opening trade.

Index futures were virtually unchanged following release of first estimate of U.S. Real GDP. Consensus was growth at a 2.0% rate. Actual was 2.3%.

First quarter reports continue to pour in. Companies that released results from yesterday’s close included Amazon, Cabot Oil & Gas, Colgate Palmolive, Dominion Energy, Exxon Mobil, Expedia, Intel, Mattel, Microsoft, Phillips 66, Rockwell Collins and Starbucks.

Amazon jumped $122.54 to $1640.50 after reporting higher than consensus first quarter results. Wedbush raised its target price to $1800 from $1750.

Microsoft added $3.36 to $97.62 after reporting higher than consensus first quarter results. JP Morgan upgraded the stock to Overweight from Neutral. Target was raised to $110 from $94.

U.S. Steel dropped $2.72 to $34.98 after lowering guidance.

Intel jumped $3.65 to $56.70 after reporting higher than consensus first quarter results.

EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/04/26/stock-market-outlook-for-april-27-2018/

Note seasonality charts on Durable Goods Orders, Technology sector, U.S. Dollar Index. U.S. Imports and U.S. Exports.

Observations

U.S. equity indices (except Transports) pushed higher yesterday on a plethora of higher than expected first quarter earnings reports. Based on results released to date, consensus is that first quarter earnings by S&P 500 companies increased 23% versus 18.5% projected at the end of last week. Added to encouragement were several key stocks that reported higher than consensus first quarter results after the close last night including Amazon, Cisco and Microsoft. Amazon soared to $1613 in after-hours trade and tested its all-time high at $1617.54.

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Technical signs of an economic slowdown in Europe! The Euro dropped below 121.55 completing a double top pattern.

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StockTwits Released Yesterday @EquityClock

Tech action by S&P 500 stocks to 10:15: Mixed. Breakouts: $TSCO $F $ORLY $XOM $UPS $ANTM $BAX. Breakdowns: $MGM $IVZ $UHS, $EBAY $T $RTN

Editor’s Note: After 10:15 AM EDT, breakouts included: ALXN, PNW, V. PPL, PHM, DUK and ED. Breakdowns: KSU and XYL

Exxon Mobil $XOM, a Dow Jones Industrial stock moved above $79.87 completing a double bottom pattern.

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AT&T $T, a Dow Jones Industrial stock moved below $33.96 extending an intermediate downtrend.

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Saputo $SAP.CA, a TSX 60 stock moved above $41.81 completing a double bottom pattern.

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Natural gas $NATGAS at $2.83 moved above $2.81 completing a double bottom pattern.

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U.S. Natural gas inventories $NATGAS continue to move lower, well below their 5 year average for this time of year.

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‘Tis the season for natural gas and “gassy” stocks to move higher to mid-June! $NATGAS

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End of natural gas withdrawal period now confirmed to be 3 weeks past due.

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U.S. Exports showing strength in March, up 16% vs 14% average gain for month #Economy #TRADE #MACRO

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U.S. Durable Goods Orders up 3.3% in the first quarter, best start to the year since 2011. #ECONOMY #MANUFACTURING $MACRO $STUDY

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Platinum ETN $PPLT moved below $86.42 extending an intermediate downtrend.

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WestJet $WJA.CA moved below $22.19 on labour negotiations extending an intermediate downtrend.

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Visa $V, a Dow Jones Industrial stock moved above $126.66 to an all-time high extending an intermediate uptrend.

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U.S. Utility breakouts this afternoon: $DUK $ED $PHM $PNW.

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Trader’s Corner

Daily Seasonal/Technical Equity Trends for April 26th 2018

april 27 spx

Green: Increase from previous day

Red: Decrease from previous day

 

Daily Seasonal/Technical Commodities Trends for April 26th 2018

april 27 crb

Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

 

Daily Seasonal/Technical Sector Trends for April 26th 2018

april 27 xlk

Green: Increase from previous day

Red: Decrease from previous day

 

Schachter Energy Report for April

Josef’s latest monthly report was released recently. His subscription service is available at

www.shachterenergyreport.ca. Josef remains relatively bearish on North American equity markets and the energy sector, but bullish on natural gas prices and related equities. See Josef on BNN’s Market Call at 1:00 PM on Tuesday May 1st

S&P 500 Momentum Barometer

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The Barometer added 1.00 to 43.00 yesterday. It remains intermediate neutral.

 

TSX Momentum Barometer

The Barometer added another 4.69 to 64.20 yesterday. It returned to intermediate overbought from intermediate neutral, but continues to move higher.

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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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32 Responses to “Tech Talk for Friday April 27th 2018”

  1. Ron/BC Says:

    The U.S.$ broke out over its 16 month downtrendline and cleared price resistance at 91. More resistance ahead but it does look like the tide has turned in its favour once again not surprisingly.

    http://stockcharts.com/h-sc/ui?s=%24USD&p=D&yr=2&mn=6&dy=0&id=p98728457271&a=579408533

  2. roy Says:

    Hello Bernie
    Thanks for the replies on AD and ENB.
    You mention about the debt of ENB and that it was not too much of an issue,but with interest rates rising, will that not make servicing that debt even more expensive?

  3. Ron/BC Says:

    If I recall it was April 27th 1981 when the Dow hit a new all time high of 1024 which was the top of the bull market and a major bear market and recession followed. Not 100% sure of this exact date but it certainly feels right. Man, that was a very bad recession in everything.

  4. Bernie Says:

    Roy,

    Re: #2 ENB
    I imagine it would but I don’t know how their debt is structured. Perhaps Dutchcanuck can chime in here and give you his take. Dutch knows Corps and actually reads financial reports. lol

  5. Paula Says:

    RE: ENB.TO
    Here are some opinions against Enbridge to counter the bullish ones mentioned on BNN yesterday:

    Daniel Lloyd, Andrew McCreath, or Brian Acker, Rick Stuchberry:

    https://www.bnn.ca/video/why-im-short-on-enbridge-money-manager~1005416

    https://www.bnn.ca/video/brian-acker-discusses-enbridge~1379365

    https://www.bnn.ca/video/mccreath-3-is-just-a-number~1379133

    https://www.bnn.ca/video/rick-stuchberry-discusses-enbridge~1377532

    As much as the yield is a tempting ~ 7%, I have stayed away and am glad. The chart is still in a down trend…

  6. Bernie Says:

    Ron/BC,

    Re: #3
    I wasn’t in the market until 1984 but do remember the sky high interest rates which peaked in late ’81 I believe followed by the recession. Other than the date does it really seem similar today? The rates are still quite low today and are rising slowly rather than topping.

  7. Sandra Says:

    Ron/BC:
    I was enjoying my first great job after graduation. Had a great boss always jovial. That morning he in his cubicle he talked in whispers very stressed. After about an hour he left in a hurry without a word. Had a no clue what was happening to him or in stock market. Can figure out now. I also remember Oct crash few years later. Still had no clue. Lol!

  8. dutchcanuck Says:

    Bernie
    You are correct in saying that interest rates are still quite low. This is an argument I hear on BNN&CNBC all the time, but here’s how I look at it. It’s the percentage of the move in rates that really counts or in TA terms Rate of Change. If the discount rate gets changed from 1.75% to 2% that’s a 14.3% increase, so in Canada’s case we went very quickly from 1.25 to 1.75, That’s a 40% increase. So if a person or a business has debt than the interest payments can become dire in a hurry.

    Re ENB I calculate from their balance sheet that their total debt is $79.5B, not the $60B that’s touted by the media and the analysts. ENB’s debt interest payments went from $170m to $235M year over year and are skyrocketing upward. They have a problem with refinancing their debt, so they dilute the shares by issuing more stock and any debt they do refinance is at much higher rates. So one answer is to sell some assets, but the party at the other side of the table knows you’re in deep doodoo(technical term) and lowballs you on the assets you want to sell or makes a bid bid for the assets you don’t want to sell. They need to sell $10B of assets quickly otherwise the stock price goes to $32. Of course they can always cut or eliminate the div. As always just my opinion, pls do your own diligence.

  9. Paula Says:

    I posted some comments on ENB. Guess I put too many links so it is “awaiting moderation”. Maybe show up later tonight…

  10. bruce Says:

    ron #3
    I think the DJ hit a high in 1976 around 1000 and later bottomed in August 1982 when Henry ?? from Goldman Sachs announced that interest rates had topped….that set fire to the bull market in bonds and stocks…….

  11. Paula Says:

    All trading on TSX halted:

    https://www.cp24.com/news/tsx-montreal-exchange-down-due-to-technical-problems-1.3905487

  12. Sandra Says:

    TSX closed for rest of the day. No trading on TSX . US markets OK

  13. Bernie Says:

    dutch,

    Re: #7
    Thanks for your input to Roy’s question. I haven’t owned any ENB since Feb. I still feel it to be a buy considering its cheap price but it probably hasn’t bottomed yet. As you say, they could eliminate their dividend for some breathing space. That however would trigger a huge selloff of the stock, probably to much lower than $32. IMO selling assets would be the preferred route considering their promise of continued dividend increases. Shareholders in it for the income hate surprises.

  14. Ron/BC Says:

    Bernie
    Interest rates were high in 1981 but there was a fevered pitch in housing prices and the stock market in many sectors which was the same buy,buy,buy mentality causing extremes in the market like we’ve recently had. Each bull market has it’s differences but the extremes in buying are the same. Just like the tulip bulb buying. That mindset always comes to a crashing end with government intervention as we’ve been seeing at all levels of government plus interest rate hikes like the big one we saw today by the TD Bank and the Royal.

  15. Bernie Says:

    Ron/BC,

    I don’t disagree. I think its a good time to diversify ones holdings, including fixed income. I remember the high interest period well. Its when I climbed out of debt and then bought my first home in 1982. I used a mortgage broker to find me the best deal…17% over with a one year renewal. The following year I went with a 11% rate with a three year renewal.

  16. Ron/BC Says:

    Bernie
    Just read in the paper today that CMHC stated that the Greater Victoria housing market continues to show a high degree of vulnerability as it remains overvalued for the 4th consecutive quarter with housing prices among the highest in the country. This is what I was referring to in 1981 when house prices were soaring. Great time to buy and reno homes but as I always do I exited that market early before prices plunged. I know at the time my own home dropped 30% in value from 1981 to 1983. But after 12 years I did sell it for 5 times what I paid for it. Fortunately I bought a better home in 1983 at the low and sold it in 2014 also for 5 times what I paid for it. So now I am considering buying a condo but after reading this report it would have to be a great deal as this is not the time to be a buyer unless under exceptional circumstances. I think I’m just getting bored as I’m happy renting a top floor apt facing south with a great view and sunny all the time. And I don’t pay for all the repairs that get done which is a treat. I don’t even get a heat or water bill. Meanwhile I might change all my cash into loonies and toonies and build a money bin to roll around in like Scrooge. I don’t have enough for Gold or Silver coins or jewels though,lol.

  17. rick Says:

    Ron/BC , regarding 16#

    Your house increase 5 times between 1983 and 2014 .
    Dow Jones increase 14 times between 1983 and 2014 ( from 1200 to 17000 )
    Dow Jones was 1000 in 1981 and today is 24000 ( 24 times )
    Maybe you should rent this great apartment in 1981 and invest the money in Dow Jones(DIA) ?
    No repairs bills and heat and water bills and property tax for 31 years !
    Unfortunately the ETF DIA was not available in 1981-1983, only index mutual funds = still OK to invest

    If an investor would like to buy real estate and not stocks how about XRE.TO
    http://www.tickertech.com/cgi/returns.mpl?symbol=XRE.CA&smonth=01&sday=01&syear=1995&emonth=04&eday=28&eyear=2018&compareto=none&other=

    XRE with dividends re-invested = 4 times in 15 years
    And from landlord point of view = no bad renters , no repairs to pay , no heat and water bills to pay for renters , no tax property to pay , no rent increase controls from government , easy accounting …
    And great diversification of investment ( multiple real estates including commercials and industrial , offices …) comparative with the risk to buy a only one house …

  18. Ron/BC Says:

    Rick
    No one buys the Dow or $SPX they buy individual stocks. The Indexes have the advantage of removing the bad stocks such as Nortel and many others that lost all or most of their value and replaced them with good stocks. Individual stock investors don’t have this luxury. It only takes a few bad stocks like that to blow a person’s account up. I know many that did just that. The numbers you quote that are reported are false due to this. Just ask any group of people how the stock market has treated them over a 20 to 50 year period and they will tell you stories of major losses far more often than brag about their gains. I have personally done this since the late 60’s. I did construction work for many well off people and regular individuals for over a 40 year period and asked every one of them if any part of their wealth could be attributed to the stock market. Most laughed as if that was a joke or just told me they wished they had never put a dime in the stock market. No one ever said the stock market had a signficicant influence on their overall wealth. And picking woulda,coulda,shoulda stocks & ETFs in hindsight over the decades is unrealistic. So you can come up with as many stories or percentage gains as you wish but don’t expect me to believe them. Real estate has always been the key to wealth since the beginning of time. Not the stock market. I don’t think many would argue that point. That is a fact and has served me well and with only 10 properties bought and sold over my lifetime. Not many trades but I didn’t need anymore than that. Even now anyone with a home on the mainland has a million dollar asset. And most in Victoria have close to that in a single home. I know many very average people that can cash in anytime they wish and they don’t need stocks to add to their wealth. Not a very sexy investment story like the exciting stock market but a very successful one for home owners.

  19. roy Says:

    Thanks for your comments on Enb – Bernie, Paula and DutchCanuck and of course Ron/Bc

  20. FishFat Says:

    Here are the Cdn and USD weekly charts for Enbridge – they are similar. Both are still bearish, with no hint of a turn-around just yet. The C$ chart shows support at C$37.00 and the USD chart at US$29.69.

    For the charts to suggest a bottom, the price would need to penetrate the current downtrend, the Full Stochastics would need to move back above the 20-level, SCTR would need to move up above the 30-level, the MACD would need to cross above the signal line, and ideally both the OBV and Accum/Dist curves would need to be turning up. That could all happen fairly quickly, but the charts have some work to do yet.

    http://schrts.co/gaauLt

    http://schrts.co/CqhDVV

  21. FishFat Says:

    The problem I see with Enbridge is that their forecast earnings per share for the next twelve months is $2.28 and their expected dividend pay-out per share for the same period is $2.68 (assuming they don’t raise the dividend yet again). To make it work they will need to (as dutchcanuck & Bernie have pointed out) borrow more money, sell assets, or cut the dividend. Or….. if management truly believes the stock is undervalued they could start buying back and cancelling shares. This would spread the earnings/dividends across fewer stocks and give a boost of confidence to the share price. Of course, if they would need to borrow cash or sell assets to do this.

  22. dutchcanuck Says:

    BNN has a program called “Weekly with Andrew” after the market close each Friday. Yesterday’s program featured Joe Farrell a chart technician in a TA Primer. The guy is pretty good and I would recommend you see this. Among his charts shown were SU and ENB and 10yr bonds. His target price on ENB is $24. His overall call on the market is positive.

  23. dutchcanuck Says:

    Interesting factoid:
    The Norwegian Sovereign Fund holds US1T in investments. Works out to $200K for every woman, man and child. This is the Norwegian Heritage Fund where they save a large part of their energy revenues. In nov2016 they decided to divest all fossil fuel investments from their fund for 2 reasons. 1) their revenues are from fossil fuel so investing in same is a duplication 2) good old climate change reasons(???).
    They have completed their divestment. Among the fossil fuel cos were:
    Suncor $542M, Enbridge $314M, CNQ $286M, Cenovus $111M and Imperial Oil $106M.

  24. Ron/BC Says:

    Dutchcanuck

    I looked up the BNN program you mentioned called Weekly with Andrew McCreath and I see it’s on this Sunday morning at 9:30am to 10am. I do enjoy his comments and charts on The Close I think he’s normally on as he does try to cut through a lot of typical info and seems original. On the BNN site it also says “Original airing 2013-01-10.” Not sure if this is a rerun or a more recent analysis. I guess I’ll see tomorrow morning.

  25. dave/ab Says:

    Ron. I believe a new airs every Friday after the close

  26. Ron/BC Says:

    Dave/ab
    Ok,thanks. I’ve seen his show a few times. Wasn’t sure if this was a special one or not. The guy claims to be a fundamentalist but I’m more impressed with his technical charts and analysis of them than his fundamental analysis that is subject to constant change.

  27. Paul Says:

    Dave and Ron, here are links to these videos from Friday

    https://www.bnn.ca/video/how-technical-analysis-can-help-you-trade-part-1~1381916

    https://www.bnn.ca/video/how-technical-analysis-can-help-you-trade-part-2~1381928

    Ron, if you have time what do you think of the POW.to chart ? Still looks in a solid uptrend from 2009. Thanks.

  28. dave/ab Says:

    Thanks, Paul

    Andrew Mcccreath has a monthly newsletter you can subscribe to through his website. Very informative. http://www.forgefirst.com/

  29. Kam Says:

    Hi Rick & all

    TAX question

    I know you have IB so the T5008 they send us and it shows Box20(cost or book value) and Box21(Proceeds of disposition) amounts, do you know does the amount shown have commission we pay for buy-sell included in it or not??. In other words, do you add commissions to reduce your tax owing into the cost? Tia. I added mine up and it doesn’t look like the commission or other deductions(like data fees, interest charged on) they do is included in it. I don’t know if cra allow some of them but as this is an investment account I have so I pay capital gains tax so better allow me to deduct.

    I guess it is a general question to anyone who know about taxes. Please let me know.

    PS: I know I’m late to file taxes but rather wait until last day to pay Uncle Sam, lol

  30. Ron/BC Says:

    Paul
    Here is POW.to. Stock is rallying with resistance at $31. Price has shown higher highs and higher lows which is positive. The RSI 8 is overbought so with price approaching $31 resistance it may have to pullback and regroup to mount another attack.Note the 20ema has crossed above the 50ema twice on this chart and each time price has had a steady rise after. That is about to occur once again along with the 50,200,20 Modified MACD about to cross the zero line again. Looks good overall but the recent spike up would have me cautious at this price as a pullback is likely before clearing $31.

    http://stockcharts.com/h-sc/ui?s=POW.TO&p=D&yr=2&mn=0&dy=0&id=p88090020391&a=591542303

  31. Ana Says:

    $SPX $ES

    Have my eye on a head and shoulder formation.

    Hopefully, it will play out.

  32. Ana Says:

    More important news!

    I am a Grandma! Yahoo!

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