Tech Talk for Monday November 19th 2018

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Pre-opening Comments for Monday November 19th

U.S. equity index futures were lower this morning. S&P 500 futures were down 6 points in pre-opening trade. Index futures responded to increasing trade tensions at the APEC summit between the U.S. and China.

Apple dropped $3.53 to $190.00 after the company reported lowering production for its recently introduced iPhones.

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Helmrich & Payne (HP $62.59) is expected to open higher after SunTrust upgraded the stock to Buy from Sell.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/11/16/stock-market-outlook-for-november-19-2018/

Note study on performance of the S&P 500 Index around U.S. Thanksgiving and seasonality charts on Industrial Production, Manufactured Goods Sales, Inventories and the Materials sector.

 

WALL STREET RAW RADIO

SATURDAY, NOVEMBER 17, 2018 –

WITH YOUR HOST, MARK LEIBOVIT

GUESTS INCLUDE: DON VIALOUX, HENRY WEINGARTEN, HARRY BOXER, AND SINCLAIR NOE

https://tinyurl.com/ycunetye

 

Excerpts from Wall Street Raw by Don Vialoux

North American equity indices came under technical pressure last week. They lost approximately half of their gain recorded since reaching their seasonal low on October 29th. North American equity markets have a history of moving higher during the Christmas buying season from late October to the first week in January. An important extra trigger for strength in equity prices late this year is anticipation of announcements on share buybacks. The latest announcement came on Thursday from Intel with a $15 billion share buyback program.

Technical action by Gold prices, gold stocks and related ETFs was mildly encouraging last week. They remain in a trading range, but moved back above their 50 day moving average as part of a base building pattern. Nice breakout by Newmont Mining and Franco-Nevada on Friday, completing double bottom patterns. However, the sector is expected to come under tax loss selling pressures between now and mid-December. Thereafter, the sector enters into a period of seasonal strength lasting until the end of February.

Technical action by Base Metal prices, base metal stocks and related ETFs also was mildly encouraging last week. The sector also appears to be forming a base building pattern. Seasonal influences turn favourable in mid-November and remain positive until late April. Individual stocks in the sector performed well last week. Nice breakout by Teck Resources, a major copper/zinc/coal producer above a base building pattern on Thursday! World inventories of copper and zinc are at multi-year lows setting the stage for higher prices. China is the biggest user of base metals. Resolution of the trade dispute between the U.S. and China could be the trigger for the next big move by the sector. Nice breakout by the Shanghai Composite Index on Friday, completing a short term base building pattern. The easiest way to participate in the sector is through an ETF including PICK and COPX in the U.S. and XBM and ZMT in Canada.

Global Warming enthusiasts had another rough week last week. Natural gas prices advanced 37% over the past three weeks including a 15% gain last week. Prices are moving higher due to colder than average weather in Canada and the northern half of the U.S. at a time when U.S. inventory levels are near a 20 year low. One analyst attributed colder weather to declining sun spot activity as part of its 11 year cycle leading to declining solar radiation reaching the earth. If so, prepare for a cooler than average weather in North America lasting throughout the winter.

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The Bottom Line

Favourable seasonal influences from October to the first week in January for major U.S. equity indices continued to surface last week. This year the traditional start was delayed by two weeks to October 29th. Strong gains recorded after October 29th were reduced by about 50% early last week followed by resumption of gains on Friday.Seasonality charts for the S&P 500 Index and Dow Jones Industrial Average are offered below.

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Seasonal influences normally are most notable during U.S. Mid-term election years (although start of the favourable period was delayed this year to the end of October). Investors were concerned about a possible change in political control in Congress. Their concerns were very real this year. Pollsters were calling for a “Blue wave” with control taken by the Democrats over both the House and the Senate. Instead, it proved to be a “Blue trickle”. Democrats regained control of the House, but failed to gain control of the Senate. Historically, split control of Congress has been positive for U.S. markets because Congress is less likely to interfere in economic growthclip_image008

Favourable seasonal influences also continued to surface for Canadian equities last week. The TSX Composite Index has closely followed its seasonal pattern this year. Performance of the TSX Composite Index normally is negative from the third week in July to mid-October followed by start of period of seasonal strength. This year, the seasonal upturn began on October 29th. Thereafter, the Index gained 5%, lost half of the gain early last week and resumed the recovery late last week.

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Preferred strategy now is to add to seasonally favoured equity securities for a seasonal trade expected to last to the first week in January.

Observations

Third quarter reports by S&P 500 companies are winding down: 92% of companies have reported to date. Most companies beat consensus earnings per share (78%) and sales (61%) estimates. Another 20 S&P 500 companies are scheduled to release results this week.

Technical action by individual S&P 500 stocks was mixed last week. Number of stocks breaking intermediate resistance totaled 21 while number of stocks breaking support totaled 41 (notably energy stocks). The Up/Down ratio increased last week to (122/326 =) 0.37 from 0.36.

Trading activity in North American equity markets is expected to wind down to below average levels as the U.S. Thanksgiving Holiday approaches. “Black Friday” traditionally is a very slow day.

U.S. economic focuses this week are October Housing starts on Tuesday and Durable Goods Orders on Wednesday.

Canadian economic focus is on the October Consumer Price Index, September Retail Sales on Friday and the Economic Report on Wednesday

Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) moved lower last week. See charts near the end of this report

Medium term technical indicators in Canada were mixed last week. See charts near the end of this report.

Short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum) moved lower early last week, but recorded significant gains on Friday.

Short term technical indicators for Canadian markets and sectors moved lower early last week but recorded significant gains on Friday.

Short term political concerns remain elevated. Issues include heightened tariff wars with China and the Mueller investigation.

Longer term outlook for earnings and sales by S&P 500 companies remains positive and improving. According to FactSet, consensus calls for a 25.7% increase in earnings on a year-over-year basis (up from 25.2% last week) and a 9.4% increase in sales in the third quarter. Consensus calls for a 13.9% increase in earnings and 6.8% increase in sales in the fourth quarter. Consensus calls for a 20.5% increase in earnings and an 8.9% increase in sales for 2018. Consensus calls for a 5.3% increase in earnings and 6.4% increase in sales in the first quarter 2019. Consensus calls for a 5.8% increase in earnings and 4.8% increase in sales in the second quarter 2019. Consensus for 2019 calls for a 9.0% increase in earnings and a 5.3% increase in sales.

Major U.S. companies are looking for places to invest their new found cash flow. Look for anticipation of news about share buybacks, increased dividends, take overs, employee bonuses and wage increases prior to release of fourth quarter results. Last week, Nike announced a 10% dividend increase and Intel announced a $15 billion share buyback program. In other words, “Santa Claus is coming to town”.

 

Economic News This Week

October Housing Starts to be released at 8:30 AM EST on Tuesday are expected to increase to 1.235 million units from 1.201 million units in September.

October Durable Goods Orders to be released at 8:30 AM EST on Wednesday are expected to fall 1.8% versus a gain of 0.8% in September. Excluding transportation, October Durable Goods Orders are expected to increase 0.4% versus unchanged in September.

Weekly Jobless Claims to be released at 8:30 AM EST on Wednesday are expected to slip to 215,000 from 216,000 last week.

October Existing Home Sales to be released at 10:00 AM EST on Wednesday are expected to increase to 5.23 million units from 5.15 million units in September.

November Michigan Consumer Sentiment Index to be released at 10:00 AM EST on Wednesday is expected to increase to 98.5 from 98.3 in October.

Canadian Federal Government Fall Economic Statement is released at 4:00 PM EST on Wednesday

 

U.S. Thanksgiving Day: U.S. Markets are closed.

October Canadian Consumer Price Index to be released at 8:30 AM EST on Friday is expected to increase 0.1% versus a decline of 0.4% in September.

September Canadian Retail Sales to be released at 8:30 AM EST on Friday is expected to be unchanged versus a decline of 0.1% in August.

 

Earnings News This Week

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Trader’s Corner

Note the significant improvement in technical scores recorded on Friday triggered mainly by gains by the 20 Day MA and Short Term Momentum indicators

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for November 16th 2018

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for November 16th 2018

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Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for November 16th 2018

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Green: Increase from previous day

Red: Decrease from previous day

Technical scores

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

 

Changes Last Week

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StockTwits Released on Friday @EquityClock

Newmont Mining $NEM moved above $33.25 completing a double bottom pattern. Other gold stocks also higher.

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Technical action by S&P 500 stocks to 10:00: Mixed. Intermediate breakouts:$NEM $AWK $SCG. Breakdowns: $JWN $KSS $M $ROST $NVDA

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Franco-Nevada $FNV $FNV.CA moved above $88.31 Cdn completing a double bottom pattern.

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Cdn. Natural Resources $CNQ.CA, a TSX 60 stock moved below $35.31 extending an intermediate downtrend

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Cenovus $CVE.CA, a TSX 60 stock moved below $10.59 extending an intermediate downtrend.

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Canada #Manufacturing Sales down 4.2% (NSA) in September, a divergence from the 1.3% gain that is average for the month $MACRo #CDNecon #CAD

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US Industrial Production down 0.7% (NSA) in October, slightly weaker than the 0.6% decline that is average. $MACRO #Economy #Manufacturing

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Despite strength in retail sales, stocks in the industry are not performing according to seasonal norms. http://www.equityclock.com/2018/11/15/stock-market-outlook-for-november-16-2018/ … $XRT $RTH

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S&P 500 Momentum Barometers

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Percent of S&P 500 stocks trading above their 50 day moving average slipped last week to 41.60 from 46.20. Percent changed to Intermediate Neutral on a move above 40% on Friday from Intermediate Oversold. An uptrend trend has resumed.

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Bullish Percent Index dropped last week to 45.40 from 50.40.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average increased last week to 35.54 from 32.92. Percent remains intermediate oversold and trending higher.

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Bullish Percent Index for TSX stocks slipped last week to 39.34 from 43.44. The Index changed to Intermediate Oversold from Intermediate Neutral.

 

Disclaimer: Seasonality and technical ratings offered in this report and at

www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed

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3 Responses to “Tech Talk for Monday November 19th 2018”

  1. Ana Says:

    $SPX $ES

    https://invst.ly/99gfd

  2. Ana Says:

    The reason I did not think that the larger Inverse Head And Shoulders would not work, is that the shoulders are usually parallel. I thought this chart appeared more like a double top.

    Ron/BC Says:
    November 15th, 2018 at 5:17 pm
    Ana
    On a Daily chart there is a huge Inverse H&S. A breakout over 2815 would project a rally to over 3000 on the $SPX. As much as I hate to encourage wild eyed bulls that are up to their neck in long positions and just looking for bullish charts and comments I thought I should post this regardless just for the technical possibility of it happening. And on the flip side a break below the spring closing lows of 2580 which is also much the same as the October lows Head of this H&S that would suggest it’s crash and burn time and to run for the hills as the dam’s busted. Something a broker told me long ago when I asked him why so many of his clients held onto losing positions inspite of his warnings and he said “Win or Lose” everyone gets a RUSH.” Sad but true…………..

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=1&mn=0&dy=0&id=p0008436756c&a=582707024

  3. Ana Says:

    $SPX $ES

    Before we go back down. Maybe.

    https://invst.ly/99hht

    Smaller H & S on one hour.

    Macd has crossed to the downside on the five-hour chart, so chances that we continue down are good.
    Nothing is for certain though, in the market. Everything is just an educated guess.

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