Tech Talk for Monday March 11th 2019

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Pre-opening Comments for Monday March 11th

U.S. equity index futures were higher this morning. S&P 500 futures up 4 points in pre-opening trade.

Index futures were virtually unchanged following release of January Retail Sales report. Consensus was a decrease of 0.1% versus a revised drop of 1.6% in December. Actual was an increase of 0.2%. Excluding auto sales, consensus for January Retail Sales was an increase of 0.2% versus a revised drop of 2.3% in December. Actual was an increase of 0.9%.

Boeing dropped $38.99 to $383.55 following crash of one of its 737-Max 8 aircraft. Several countries temporarily grounded use of similar aircraft.

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Southwestern Airlines (LUV $51.77) and WestJet (WJA $20.42 Cdn.) are expected to open lower. They use a fleet of 737 Max 8 aircraft.

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NVidia gained $1.36 to $152.00 after the company announced a cash offer to purchase Mellanox for $125 per share. Value of the offer is $6.9 billion. NVidia claims that the acquisition is accretive to earnings.

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Walt Disney (DIS $113.81) is expected to open higher after its Captain Marvel movie launched over the weekend reported higher than expected revenues.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/03/08/stock-market-outlook-for-march-11-2019/

Note seasonality charts on Non-farm Payrolls and Canadian Employment.

WALL STREET RAW RADIO

SATURDAY, MARCH 9, 2019

WITH YOUR HOST, MARK LEIBOVIT.

SPECIAL GUESTS: DON VIALOUX, HARRY BOXER, SINCLAIR NOE,

HENRY WEINGARTEN AND RALPH CASE:

https://tinyurl.com/y559sgxz

 

Excerpt from Don Vialoux’ comments on Wall Street Raw

The Bear Market Rally in U.S. equity markets abruptly ended at the beginning of last week. Broadly based U.S. equities broke short term support levels and their 20 day moving averages. Notable was the break by the S&P 500 Index below 2765 to complete a short term double top pattern. U.S. equity markets have entered into an intermediate term corrective phase.

Index futures are responding to declining earnings prospects. Consensus for first quarter earnings by S&P 500 companies recently fell to a year-over-year decline of 3.4%. A major reason for consensus earnings declines is strength in the U.S. Dollar Index. On Thursday, the U.S. Dollar Index broke to a 21 month high. Strength in the U.S. Dollar Index has prompted analyst to reduce their first quarter sales and earnings estimates, particularly for companies with sales and earnings realized outside of the U.S.

Strength in the U.S. Dollar Index has prompted weakness in commodity prices. The exceptions were gold and silver on Friday. They moved higher with strength in the VIX Index despite strength in the U.S. Dollar Index. Strength in gold and silver under these circumstances is an early warning sign that world equity markets have entered into a period of higher than average volatility.

Natural gas prices continued to move higher last week. Alberta gas spiked to as high as $4.86 per MBtu from a low of $1.50 per MBtu in mid-January. “Gassy”stocks on both sides of the border responded. Nice breakout by Painted Pony (PONY) above a double bottom pattern on Thursday. U.S. investors can participate by owning the natural gas ETN: UNG

 

The Bottom Line

The bear market rally in U.S. and Canadian equity markets decisively ended early last week and entered into an intermediate correction. North American equity markets remain intermediate overbought and their short and intermediate technical indicators continued to trend lower

Observations

Technical action by individual S&P 500 stocks was bearish last week. Number of stocks breaking intermediate resistance totaled 15 while number of stocks breaking support totaled 32. The Up/Down ratio rose to (243/157=) 1.55 from 1.66.

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

Medium term technical indicators in Canada also trended lower 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) continued moving lower last week.

Short term technical indicators for Canadian markets and sectors also continued to trend lower last week.

Short term political concerns remain elevated. Issues include heightened tariff wars between the U.S. and China, anti-Trump hearings initiated by the Democrat controlled House of Representatives and expected release of the Mueller report.

Prospects for S&P 500 earnings were reduced once again last week. Recent strength in the U.S. Dollar Index has taken its toll. According to FactSet, first quarter earnings are expected to decline 3.4% (down from a decline of 3.2% last week) but revenues are expected to increase 4.9% (down from 5.2% last week). Consensus by S&P 500 companies with 50% or more of sales realized outside of the U.S. calls for a year-over-year decline of 11.2% in earnings and only a 0.7% increase in sales. Second quarter earnings are expected to increase 0.3% and second quarter revenues are expected to increase 4.6% (down from 4.8%). Third quarter earnings are expected to increase 1.7% (down from 1.9%) and revenues are expected to increase 4.5% (down from 4.6%. Fourth quarter earnings are expected to increase 8.1% (down from 8.8%) and fourth quarter revenues are expected to increase 4.8% (down from 6.2%). For all of 2019, earnings are expected to increase 3.9% (down from 4.1%) and revenues are expected to increase 5.0% (down from 5.1%).

Seasonal influences in the first and second quarters of a U.S. Pre-Presidential Election Year are favourable. Gains this year already have exceeded average gains in the first and second quarters.

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Economic News This Week

January Retail Sales to be released at 8:30 AM EST on Monday are expected to decrease 0.1% versus a drop of 1.2% in December. Excluding auto sales, January Retail Sales are expected to increase 0.2% versus a drop of 1.8% in December.

December Business Inventories to be released at 10:00 AM EST on Monday are expected to increase 0.6% versus a drop of 0.1% in November.

February Consumer Price Index to be released at 8:30 AM EST on Tuesday is expected to increase 0.2% versus unchanged in January. Excluding food and energy, February Consumer Price Index is expected to increase 0.2% versus a gain of 0.2% in January.

January Durable Goods Orders to be released at 8:30 AM EST on Wednesday are expected to drop 0.5% versus an increase of 1.2% in December. Excluding Transportation, January Durable Goods Orders are expected to increase 0.2% versus a gain of 0.1% in December.

February Producer Price Index to be released at 8:30 AM EST on Wednesday is expected to increase 0.2% versus a decline of 0.1% in January. Excluding food and energy, February Producer Price Index is expected to increase 0.2% versus a gain of 0.3% in January.

January Construction Spending to be released at 10:00 AM EST on Wednesday is expected to increase 0.3% versus a drop of 0.6% in December.

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 225,000 from 223,000 last week.

January New Home Sales to be released at 10:00 AM EST on Thursday are expected to increase to 623,000 from 621,000 in December.

March Empire State Manufacturing Survey to be released at 8:30 AM EST on Friday is expected to increase to 10.00 from 8.00 in February.

February Industrial Production to be released at 9:15 AM EST on Friday is expected to increase 0.4% versus a drop of 0.6% in January. February Capacity Utilization is expected to increase to 78.5 from 78.2 in January.

 

Earnings News This Week

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Trader’s Corner.

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for March 8th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for March 8th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for March 8th 2019

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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

Not seasonally adjusted: #Nonfarm #Payrolls up 827,000, or 0.6%, in February, stronger than 0.4% increase that is average for month. $MACRO

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Technical action by S&P 500 stocks to 10:15: Bearish. No breakouts. Breakdowns: $ROST $XEC $OXY $PXD $BK $C $PFE $JBHT $FIS $CF $IDXX

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Oil Services ETF $OIH moved below $16.28 setting an intermediate downtrend

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Emerging markets iShares $EEM moved below $41.74 setting an intermediate downtrend.

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Auto ETF $CARZ moved below $32.71 setting an intermediate downtrend

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Canada #Employment increased by 0.5% in February, marginally better than the 0.4% increase that is average. $MACRO #CDNecon #CAD

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Russia ETF $RSX moved below $20.04 setting an intermediate downtrend. Influenced by crude oil prices.

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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 plunged last week to 75.80 from 91.00. Percent remains intermediate overbought and trending down.

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Bullish Percent Index for S&P 500 stocks dropped last week to 67.40 from 73.60. The Index remains intermediate overbought and trending down.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average plunged last week to 70.17 from 81.86. Percent remains intermediate overbought and trending down.

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Bullish Percent Index for TSX stocks was unchanged last week at 56.30. The Index remains intermediate neutral, but showing early signs of rolling over.

 

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http://www.equityclock.com/about/seasonal-advantage-portfolio/

 

Updates

The drop by the S&P 500 Index below its 20 day moving average on Friday prompted downgrades from previously supported seasonal trades. They no longer are favoured. All of the securities listed below currently have a small to moderate profit. However, they dropped below their 20 day moving average on Friday and recorded downtrends by their short term momentum indicators (i.e. daily Stochastics, RSI and MACD).

 

XBM .TO ($12.20) discussed on January 9th at $11.25

NKE ($84.80) discussed on January 17th at 79.13

ZEM.TO ($19.57) discussed on January 17th at 19.13

EEM ($41.64) discussed on January 17th at $41.35

EPP ($45.04) discussed on January 17th at $43.03

BHP ($51.65) discussed on January 29th at $49.11

ZEB.TO ($28.81) discussed on January 29th at $28.49

FXI ($42.75) discussed on January 30th at $42.56

 

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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9 Responses to “Tech Talk for Monday March 11th 2019”

  1. Ron/BC Says:

    The $SPX is bouncing off its 50ema/200ema/Fib61.8% retracement point which are all at the same point. The key thing to watch is for price to either clear the 2815 area and run or roll over and break below this support level.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=1&mn=0&dy=0&id=p9412314680c&a=582707024

  2. Ron/BC Says:

    Here is a chart of the U.S.Oil Fund USO. Price is once again testing the $12 resistance level. Price would need to clear and hold above this level to expect a continued rally from here.

    https://stockcharts.com/h-sc/ui?s=USO&p=D&yr=4&mn=0&dy=0&id=p82636561780&a=579408486

  3. Ron/BC Says:

    For those trading on the $TSX here is a chart of XEG.to which is the Oil Stocks ETF. Price needs to clear “and hold” above the big round number of $10 to suggest further gains. Even with a weak CD$ price hasn’t been able to clear this resistance level.

    https://stockcharts.com/h-sc/ui?s=XEG.TO&p=D&yr=5&mn=0&dy=0&id=p8794056254c&a=579408452

  4. DougP Says:

    Just got back from three weeks in New Zealand, thereby missing three weeks of miserable weather here in Victoria (and today is nothing to shout about.) I caught only snippets of TM while away, but I think I saw a comment on TD’s Money Market Fund TDB164, and how TD offered a more profitable MM fund, but the symbol I cannot recall. Does anyone have it?

  5. Paula Says:

    DougP,
    Perhaps you are referring to TDB8150. I have mentioned this before as a “money market” fund that I use to park cash. I believe it is actually a high interest savings account and is covered by CDIC for up to $100,000.
    I like that there is no commission to buy or sell even if held for a short time. The initial deposit must be at least $1,000 but then you can add odd ball amounts. It is currently yielding 1.6%.

  6. DougP Says:

    Thanks, Paula. I shall check it out.

  7. FishFat Says:

    Ron/BC re: #3
    Last Friday the Norwegian Sovereign Wealth Fund announced that it would be further di-vesting itself of some foreign oil and gas holdings. The Globe & Mail reported on Saturday that the Norwegian Fund owns about 1% of the outstanding shares of Cdn Natural Resources, 0.6% of Encana, and lesser amounts Arc Resources, Crescent Point Energy and Whitecap Resources. That sort of news can’t help XEG.TO clear that $10 hurdle.

  8. Ron/BC Says:

    FishFat

    Thanks for that info. I did hear or read something about them selling off CD assets in their Oil and gas holdings. Also a major U.S. Oil company last year was divesting itself of Oil Sands investments. No sense banging your head against the wall when everyone and his dog is trying to bring the oil industry down in Canada including the Feds. But price is king so “IF” one was interested in XEG.to it does have to clear $10 bucks to suggest more upside. And no,I wont be betting on that as I’ll stick to U.S. investments. I’m watching USO for a break above $12. I traded ECA for a dead cat bounce and got that but it pulled back further than I thought it would but is bouncing once again. The CD$ makes charting some of these stocks more difficult. That’s another reason I stick to U.S.stocks and ETFs.

  9. Ana Says:

    Great short trade on $NatGas!

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