Tech Talk for Monday July 9th 2018

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Pre-opening Comments for Monday July 9th

U.S. equity index futures were higher this morning. S&P 500 futures were up 9 points in pre-opening trade.

Canadian Pacific (CP $237.23 Cdn.) is expected to open higher after Raymond James upgraded the stock to a Strong Buy. Target price is $275 Cdn.

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Anadarko (APC $73.66) is expected to open higher after adding $1 billion to its share buyback program. The company also intends to reduce its debt by $500 million.

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Lululemon gained $0.46 to $129.00 after Oppenheimer raised its target price to $140 from $125.

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Capital One (COF $92.90) is expected to open higher after Oppenheimer upgraded the stock to Outperform from Perform.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/07/06/stock-market-outlook-for-july-9-2018/

Note seasonality charts on Non-Farm Payrolls, Hourly Earnings, Canada Employment, Health Care sector and the Biotech sector.

 

WALL STREET RAW RADIO – SATURDAY, JULY 7, 2018

Host: Mark Leibovit

https://tinyurl.com/yaar4hxf

GUESTS INCLUDE: DON VIALOUX, JIM ROHRBACK, SINCLAIR NOTE, MARK SKOUSEN AND KATE SMITH

 

The Bottom Line

The proverbial “Summer Rally” in North American equity markets surfaced this year on schedule. U.S. and Canadian equity markets have a history of moving higher from late June to mid-July prior to release of encouraging second quarter corporate results. The summer rally this year will be helped by strong second quarter corporate results (20% year-over-year gain by S&P 500 companies and a 24% increase by TSX 60 companies (led by the energy sector). Thereafter, seasonal influences turn Negative from the third week in July to mid-October. Expected seasonal strength during the next two weeks will give traders an opportunity to take profits into strength. Caveat emptor!

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Seasonal influences are particularly relevant during U.S. Mid-term election years. Volatility in equity markets increases from late April to mid-October due to concerns about a possible change in political control in Congress. These concerns are very real this year. Republicans control the House by 16 votes and the Senate by one vote. On average during a Mid-term election year, the controlling party loses 24 House seats to the opposition party. Anticipation of a possible change, regardless of the final result, is a major reason for a correction in North American equity markets between late April and October.

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Ditto for Canadian equities! Seasonal influences for Canadian equity markets follow a similar pattern to the U.S. They normally recover from late June to until mid-July in anticipation of encouraging second quarter corporate results and turn negative until mid-October. Data shows that the TSX Composite Index has advanced in 13 of the past 20 periods from June 1st to October 12th. However, the seven drops in the past 20 periods were significant: five of the seven drops exceeded 12%. Accordingly, caution by equity investors is advised. Current technical, seasonal and fundamental considerations suggest that a 12% + correction by the TSX Composite Index this summer is higher than average.

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Economic News This Week

June Canadian Housing Starts to be released at 8:15 AM EDT on Tuesday are expected to increase to 210,000 from 195,600 in May.

June Producer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.2% versus a gain of 0.5% in May. Excluding food and energy, June Producer Prices are expected to increase 0.2% versus a gain of 0.3% in May.

Bank of Canada is expected to announce its Overnight Lending Rate at 10:00 AM EDT on Wednesday. Consensus is divided between unchanged to a 0.25% hike.

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to slip to 225,000 from 231,000 last week.

June Consumer Price Index to be released at 8:30 AM EDT on Thursday is expected to increase 0.2% versus a gain of 0.2% in May. Excluding food and energy, the June Consumer Price Index is expected to increase 0.2% versus a gain of 0.2% in May.

 

Earnings News This Week

Tuesday: Pepsico

Thursday: Delta Airlines

Friday: JP Morgan, Wells Fargo, Citigroup

 

Observations

Technical action by individual S&P 500 stocks was bullish last week. Number of stocks breaking intermediate resistance totaled 33 while number of stocks breaking support totaled 13. Utilities and Health Care stocks were notable on the list of breakouts. The Up/Down ratio increased last week to (247/191=) 1.29 from 1.15.

Earnings focus this week is on U.S. money center banks reporting on Friday. Nine S&P 500 companies (and one Dow Jones Industrial company: JP Morgan) are scheduled to release second quarter results this week.

U.S. economic focuses this week are on June Producer Prices and June Consumer Prices.

Canadian economic focus this week is on the Bank of Canada’s decision on interest rates on Wednesday morning.

Inflationary pressures are rising in the U.S. and Canada (partially because of tariffs that are driving up costs). The Federal Reserve’s key inflation metric, the PCE Price Index reached another 6 year high last week. Markets responded. TIPS (Treasury Inflation Protection Notes) measured by the ETF: IPE closed at a 5 year high on Friday. Chances of another 0.25% increase in the Fed Fund rate on August 1st are increasing. Good news for precious metals and related equities!

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The U.S. Dollar Index showed additional technical signs of rolling over last week as it enters its seasonal period of weakness at the beginning of July. A change in trend in the U.S. Dollar Index is particularly bullish for energy, precious metals and their related equities/ETFs.

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Medium term technical indicators U.S. equity markets (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) trended higher last week, typical of the “summer rally”

Medium term technical indicators in Canada remained intermediate overbought

Short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum) generally recovered strongly last week from oversold levels.

Short term technical indicators for Canadian markets and sectors also turned higher

The outlook for S&P 500 earnings and sales remains positive: According to FactSet , earnings and sales estimates moved higher again last week. Second quarter 2018 earnings are expected to increase 20.0% on an 8.7% increase in sales Third quarter earnings are expected to increase 21.7% on a 7.6% increase in sales. Fourth quarter earnings are expected to increase 17.9% on a 5.8% increase in sales. For all of 2018, earnings are expected to increase 20.4% on a 7.5% increase in sales.

Short term political concerns remain elevated. Initial U.S. tariffs against Chinese goods were implemented on Thursday. China responded with equivalent valued countervailing tariffs. Additional proposed 10% tariffs on European cars also added to trade war concerns. Countervailing duties on the U.S .also have been announced by Europe, Mexico and Canada NAFTA negotiations now appear virtually dead until after the U.S. mid-term elections in November. Other issues include impact of revocation of the Iran nuclear weapons agreement (including pressure on users of Iranian oil by the U.S. to halt imports) and increased scrutiny by special council on Russia’s influence on the Presidential election. In addition, U.S. mid-term election political rhetoric has started and will ramp up into October.

 

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for July 6th 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

 

The S&P 500 Index gained 41.45 points (1.52%) last week. Intermediate trend remains down. The Index moved above its 20 day moving average on Friday. Short term momentum indicators have turned up.

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Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 59.20 from 53.40. Percent remains intermediate neutral.

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Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 60.00 from 54.80. Percent has recovered from intermediate neutral to intermediate overbought.

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Bullish Percent Index for S&P 500 stocks increased last week to 57.80 from 57.40, but remained below its 20 day moving average. The Index remains intermediate neutral.

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Bullish Percent Index for TSX stocks was unchanged last week at 63.82 and remained below its 20 day moving average. The Index remains intermediate overbought.

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TSX Composite Index gained 94.05 points (0.58%) last week. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index remains Positive (Score: 2). The Index moved back above its 20 day moving average on Friday (Score: 1). Short term momentum indicators are trending up (Score: 1). Technical score increased last week to 6 from 4.

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Percent of TSX stocks trading above their 50 day moving average increased last week to 65.70 from 61.15. Percent remains intermediate overbought.

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Percent of TSX stocks trading above their 200 day moving average increased last week to 63.22 from 59.92. Percent changed to intermediate overbought from intermediate neutral.

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Dow Jones Industrial Average gained 185.07 points (0.76%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. The Average remains below its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to -4 from -6.

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Bullish Percent Index for Dow Jones Industrial stocks was unchanged at 53.33% last week and remained below its 20 day moving average. The Index remains intermediate neutral.

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Bullish Percent Index for NASDAQ Composite stocks increased last week to 60.10 from 58.10, but remained below its 20 day moving average. The Index changed to intermediate overbought from intermediate neutral.

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NASDAQ Composite Index gained 178.09 points (2.37%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed on Friday to Neutral from Negative. The Index moved above its 20 day moving average on Friday. Short term momentum indicators have turned up. Technical score increased last week to 4 from -2.

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Russell 2000 Index gained 50.98 points (3.10%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned Positive on Friday. The Index moved above its 20 day moving average on Friday. Technical score increased last week to 6 from 0.

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Dow Jones Transportation Average gained 128.94 points (1.25%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Negative. The Average remained below its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to -2 from -4.

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Australia All Ordinaries Composite Index added 66.00 points (1.05%) 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 turned back up on Friday. Technical score remained last week at 6.

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Nikkei Average dropped another 483.63 points (2.32%) last week. Intermediate trend changed to down from neutral. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Average remained 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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Europe iShares added $0.75 (1.68%) last week. Intermediate trend remains down. Strength relative to the S&P 500 changed to Neutral from Negative. Units moved above their 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 0 from -6.

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Shanghai Composite Index dropped another 100.19 points (3.52%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. The Index remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -6.

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Emerging Markets iShares added $0.08 (0.18%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. Units remain below their 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to -4 from -6.

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Currencies

The U.S. Dollar Index dropped 0.58 (0.61%) 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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The Euro gained 0.64 (0.55%) last week. Intermediate trend remains down. The Euro moved above its 20 day moving average. Short term momentum indicators are trending up.

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The Canadian Dollar gained U.S.0.25 cents (0.33%) last week. Intermediate trend remains down. The Canuck Buck moved above its 20 day moving average. Short term momentum indicators are trending up.

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The Japanese Yen added 0.23 (0.25%) last week. Intermediate trend remains down. The Yen remains below its 20 day moving average. Short term momentum indicators are turning up.

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British Pound added 0.77 (0.58%) last week. Intermediate trend remains down. The Pound moved above its 20 day moving average on Friday. Short term momentum indicators are trending up.

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Commodities and Related ETFs

Daily Seasonal/Technical Commodities Trends for July 6th 2018

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Green: Increase from previous day

Red: Decrease from previous day

The CRB Index dropped 2.34 points (1.17%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Index remained 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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Gasoline dropped $4.00 per gallon (1.86%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Gas remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

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Crude Oil slipped $0.35 (0.47%) 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 are trending. Technical score remained last week at 6.

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Natural gas dropped $0.06 per MBtu (2.05%) last week. Intermediate trend changed to neutral from up. Strength relative to the S&P 500 Index changed last week to Negative from Positive. “Natty” remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 2.

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S&P Energy Index dropped 1.87 points (0.33%) last week. Intermediate trend remains down. 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 2.

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Philadelphia Oil Services Index slipped $0.62 (0.40%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Index moved back above its 20 day moving average on Friday. Short term momentum indicators turned up on Friday. Technical score increased last week to 4 from 6.

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Gold added $1.30 per ounce (0.10%) last week. Intermediate trend remain down. Strength relative to the S&P 500 Index remained Negative. Gold remained below its 20 day moving average. Short term momentum indicators turned up. Technical score increased last week to -4 from -6.

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Silver slipped $0.13 per ounce (0.80%) last week. Intermediate trend remained down. Strength relative to the S&P 500 Index remains Negative. Silver remained below its 20 day moving average. Short term momentum indicators turned back down. Technical score dropped back last week to -6 from -4.

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AMEX Gold Bug Index added 4.70 points (2.69%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Positive from Negative. The Index moved above its 20 day moving average. Short term momentum indicators turned up. Technical score increased last week to 2 from -6.

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Platinum dropped $9.10 (1.07%) last week. Trend remains down. Relative strength remains Negative. PLAT remains below its 20 day MA. Momentum turned up on Friday.

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Palladium slipped $3.30 per ounce (0.35%) last week. Trend remains down. Relative strength remains Negative. PALL remained below its 20 day MA. Momentum turned up on Friday.

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Copper dropped another 14.6 cents per lb (4.92%) last week. Intermediate trend changed to down from neutral. Strength relative to the S&P 500 Index remains Negative. Copper remained below its 20 day moving average. Short term momentum indicators continue to trend down. Technical score dropped last week to -6 from -4.

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BMO Base Metals ETF slipped $0.06 90.72%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. Units remained below their 20 day moving average. Short term momentum indicators turned up on Friday. Technical score increased last week to -4 from -6.

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Lumber dropped $14.20 (2.57%) last week. Trend remains down. Relative strength remained Neutral. Lumber remained below its 20 day MA. Momentum remained up.

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The Grain ETN added $0.41 (1.75%) last week with all of the gain recorded on Friday. Trend remains down. Relative strength remains Negative. Units remained below their 20 day moving average. Short term momentum indicators turned up on Friday.

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Agriculture ETF added $0.26 (0.42%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. Units remained below their 20 day moving average. Short term momentum indicators turned up on Friday. Technical score increased last week to 0 from -2.

Interest Rates

Yield on 10 year Treasuries dropped 1.8 basis points (0.63%) last week. Intermediate trend remains up. Yield remained below its 20 day moving average. Short term momentum indicators are trending down.

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Price of the long term Treasuries ETF gained $1.03 (0.85%) last week. Intermediate trend changed to up on a move above $121.96. Price remains above its 20 day moving average.

Volatility

The VIX Index dropped 1.74 (11.53%) last week. The Index moved below its 20 day moving average on Friday.

Sectors

Daily Seasonal/Technical Sector Trends for July 6th 2018

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Green: Increase from previous day

Red: Decrease from previous day

StockTwits Released on Friday @EquityClock

Pfizer $PFE, a Dow Jones Industrial stock moved above $36.90 and $36.92 extending an intermediate uptrend.

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Franco-Nevada $FNV $FNV.CA, a TSX 60 stock moved above U.S. $75.34 extending an intermediate uptrend.

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Biotech ETFs $IBB $BBH break to a 4 month high on $BIIB news.

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‘Tis the season for Biotech stocks and ETFs to move higher to mid-September! $IBB $BBH $FBT $XBI

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U.S. Telecom ETF $IYZ moved above $27.96 completing a double bottom pattern.

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Technical action by S&P 500 stocks to 10:00: Bullish. Intermediate breakouts: $MO $EQR $MAC $ALXN $BIIB $PFE $LNT

Editor’s Note: After 10:00 AM EDT, additional breakouts included MHK, JWN, HOLX, VRSK FIS, LLY, XRAY, EIX, MDLZ, PM, HUM , ES, TWO and XEL. No breakdowns.

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Canada Employment up 1.0% (NSA) in June, below the 1.3% average gain for the month. $MACRO #CDNecon #CAD

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Non-Farm Payrolls up 0.4% in June, below the 0.6% average increase for the month $MACRO #Economy #Employment

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Rogers Communications $RCI $RCI.B.CA, a TSX 60 stock moved above U.S. $48.97 extending an intermediate uptrend.

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Intact Financial $IFC.CA moved below $91.97 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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One Response to “Tech Talk for Monday July 9th 2018”

  1. Ron/BC Says:

    The Canadian Dollar $CDW broke its uptrendline from early 2016 as well as broke below the March lows. Price is now bumping up against that broken uptrendline resistance and March low and going nowhere. The U.S.$ as this site has shown tends to selloff though out July plus the B.O.C. announces a possible rate hike this Wednesday morning. I don’t believe the B.O.C. will hike rates as it is in no position to do so without a lot of economic damage. Not that it matters much what I think but “IF” the B.O.C. was going to hike rates Wednesday along with the U.S.$ rolling over and suggesting a pullback and typically selling off in July, one would think the CD$ would be anticipating that and rallying,not breaking its 2.5 year uptrendline and breaking the March lows price support. We’ll soon see but whatever happens with both currencies will affect markets. The CD$ does not always trade inverse to the U.S.$ either. The U.S.$ is bumping up against significant price resistance at 95 but has a bullish technical chart overall.

    http://stockcharts.com/h-sc/ui?s=%24CDW&p=D&yr=3&mn=0&dy=0&id=p64290519481&a=579408525

    http://stockcharts.com/h-sc/ui?s=%24USD&p=D&yr=2&mn=0&dy=0&id=p98223899622&a=590222022

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