Tech Talk for Monday March 18th 2019

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Pre-opening Comments for Monday March 18th

U.S. equity index futures were higher this morning. S&P 500 futures were up 2 points in pre-opening trade. Index futures responded partially to a 2.47% gain by the Shanghai Composite Index in overnight trade.

WTI Crude Oil added $0.15 to $58.72 after OPEC cancelled its April meeting implying extension of output cuts to its next meeting in June.

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Boeing dropped $8.99 to $370.00 after Federal prosecutors announced investigation of the Boeing 737 Max development.

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Facebook dropped $1.69 to $164.29 after Needham downgraded the stock to Hold from Buy. Citigroup lowered its target price to $187 from $205.

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Chipotle added $3.50 to $642.50 after Piper Jaffray raised its target price to $725 from $661.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/03/15/stock-market-outlook-for-march-18-2019/

Note seasonality charts on Emerging Markets, Industrial Production and Job Openings.

 

WALL STREET RAW RADIO

WITH YOUR HOST, MARK LEIBOVIT

SATURDAY, MARCH 16, 2019:

SPECIAL GUESTS: DON VIALOUX, HARRY BOXER, SINCLAIR NOE AND RALPH CASE

http://tinyurl.com/y3t54u46

 

Excerpts from Don Vialoux’s comments on

      Wall Street Raw

U.S. equity indices recorded nice gains last week. However, once again, the S&P 500 Index began to lose momentum just above the 2820 level and the Dow Jones Industrial Average stalled near the 26,000 level. Indices are responding to declining first quarter earnings expectations. Consensus for S&P 500 earnings is a drop of 3.6% on a year-over-year basis. Consensus for S&P 500 companies with 50% or higher revenues from international operations is an 11.2% year-over-year decline.

Commodity prices continued to move higher last week. On Thursday, the Commodity ETN (Symbol: GSG) completed a reverse Head & Shoulders pattern on the charts. ‘Tis the season for commodity prices to move higher to the end of April!

Crude oil and natural gas prices led the advance in commodity prices Crude oil broke to a four month high on Wednesday. Natural gas prices responded to another drop by U.S. inventories to a five year low for this time of year. “Gassy” stocks such as Chesapeake Energy, Apache and Baker Hughes recorded gains last week of 7% or more.

More news in the cannabis sector last week! Nelson Peltz received an option to purchase 20 million shares in Aurora Cannabis or potentially about a 20% interest in the company. Hexo announced acquisition of Newstrike Brands in a share exchange valued at $260 million.

Zinc prices are moving higher as LME zinc inventories move lower. Zinc stocks are responding.

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Notes used for the Money Show radio interview with Michael Campbell on Saturday

Updates to the World Outlook Conference on February 1st

Don Vialoux’s presentation topic was “2019: Year of the Commodity”

Overview: North American equity markets are in a bear market rally. Better opportunities exist in equity markets outside of North America and in commodities. From February 1st to now, TSX Composite Index and S&P 500 Index added only 4.1% while the Dow Jones Industrials advanced only 3.1%.

Best performing developed nation equity index since February 1st: Shanghai Composite Index: Up 15%.

Honourable mention: the Europe ETF (IEV), up 5.5%.

Seasonal influences for both are positive to the end of April.

Commodity ETN (GSG) completed a reverse Head and Shoulders pattern on Thursday

Seasonal influences are positive to the end of April.

Best performing commodity since February 1st: Gasoline (mentioned during radio show on February 1st)

Gasoline prices in Vancouver moved from $1.22 per litre at end of January to $1.46 now and are expected to increase to $1.51 on Monday.

Gasoline ETN: UGA is up 16% since February 1st

Seasonal influences are positive to the end of May (Memorial Day holiday).

Crude Oil: Broke above $57.88 on Wednesday to a four month high extending uptrend.

Up 6% since February 1st

Seasonal influences are positive to July.

TSX Energy Index:

Up 5.5% since February 1st

Seasonal influences are positive to the end of May.

Copper and Zinc:

Copper up 5% and Zinc up 4% since February 1st

Seasonal influences are positive to the end of April

Base Metals ETF (XBM)

Up 6.0% since February 1st

Seasonal influences are positive until early May.

Outlook for U.S. equity markets

S&P 500 momentum slowing. Resistance near current levels: 2820

Dow Jones Industrial Average momentum slowing. Resistance just above 26,000

Consensus for first quarter earnings for S&P 500 companies: down 3.6%

(down 11.2% for companies with more than 50% of revenues outside of the U.S.)

Political chaos during the next few months (attempts to impeach Trump)\

Successful trade negotiations with China already are mostly anticipated by equity market.

Outlook for Canadian equity markets:

Favoured over U.S. equity market due to greater commodity exposure

Outlook for the Canadian Dollar

Seasonal influences are positive from mid-March to mid-June

Canadian Dollar may have reached a seasonal low last week at 74.25 cents U.S.

Natural gas

Seasonal influences are positive from mid- February to mid-June

Inventory levels in the lower 48 U.S. states are at a five year low.

Price bottomed this year in mid-February at $2.54. A move above $2.90 will extend the recovery.

 

The Bottom Line

The bear market rally in U.S. and Canadian equity markets was revived last week. North American equity markets remain intermediate overbought despite a recovery in short and intermediate technical indicators last week.

 

Observations

Technical action by individual S&P 500 stocks recovered last week. Number of stocks breaking intermediate resistance totaled 31 while number of stocks breaking support totaled 6. The Up/Down ratio increased to (253/149=) 1.70 from 1.55.

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

Medium term technical indicators in Canada moved slightly lower again last week, but remain overbought. 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 higher last week.

Short term technical indicators for Canadian markets and sectors also moved higher 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. According to FactSet, first quarter earnings are expected to decline 3.6% (up from a decline of 3.4% last week) but revenues are expected to increase 4.9%. 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 0.1% (down from an increase of 0.3%) and second quarter revenues are expected to increase 4.6%. Third quarter earnings are expected to increase 1.8% and revenues are expected to increase 4.4% (down from 4.5%). Fourth quarter earnings are expected to increase 8.1% and fourth quarter revenues are expected to increase 4.8%. For all of 2019, earnings are expected to increase 3.8% (down from 3.9%) and revenues are expected to increase 4.9% (down from 5.0%).

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 Factory Orders to be released at 10:00 AM EDT on Tuesday are expected to increase 0.3% versus a gain of 0.1% in December.

Canadian Federal Budget is released at 4:00 PM EDT on Tuesday.

FOMC statement is released at 2:00 PM EDT on Wednesday. No change in the Fed Fund rate at 2.50% is expected. Press conference is held at 2:30 AM EDT.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday is expected to slip to 225,000 from 229,000 last week.

March Philly Fed to be released at 8:30 AM EDT on Thursday is expected to increase to 5.0 versus a drop of 4.1 in February.

February Canadian Consumer Price Index to be released at 8:30 AM EDT on Friday is expected to increase 0.2% versus a gain of 0.1% in January.

January Canadian Retail Sales to be released at 8:30 AM EDT on Friday are expected to increase 0.4% versus a drop of 0.1% in January.

February Existing Home Sales to be released at 10:00 AM EDT on Friday are expected to increase to 5.10 million units from 4.94 million units 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 15th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for March 15th 2019

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Green: Increase from previous day

Red: Decrease from previous day


Sectors

Daily Seasonal/Technical Sector Trends for March 15th 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

Technical action by S&P 500 stocks to 10:00: Bullish. Intermediate breakouts: $ULTA $PSX $DFS $AVGO $LRCX $TXN. No breakdowns.

Editor’s Note: After 10:00 AM EDT, intermediate breakouts included BDX, JKHY, HLT, CB, SYF, CLX and BR. Breakdown: CBS.

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Strength in U.S. indices led by semiconductors. $SOXX moved above $189.23 and $SMH moved above $106.27 extending intermediate uptrends.

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European equities and related ETFs continue moving higher. $EZU moved above $38.95 extending an intermediate uptrend.

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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 increased last week to 81.40 from 75.80. Percent remains intermediate overbought and has rolled over.

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Bullish Percent Index for S&P 500 stocks increased last week to 68.80 from 67.40. The Index remains intermediate overbought and has rolled over.

 

TSX Momentum Barometer

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Percent of TSX stocks trading above their 50 day moving average slipped last week to 69.23 from 70.17. Percent remains intermediate overbought and trending down.

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Bullish Percent Index for TSX stocks slipped last week to 55.04 from 56.30. The Index remains intermediate neutral and has rolled over.

 

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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8 Responses to “Tech Talk for Monday March 18th 2019”

  1. dave/ab Says:

    Here is Michael Campbells show with Don.

    https://moneytalks.net/category/mikes-content/mikes-interview-of-the-week/

  2. Larry/ON Says:

    The break higher is starting to look more convincing. Friday’s volume was highest YTD and almost double the average on the SP500. It’s all very incremental. You wonder at what point the the bears capitulate.

  3. Mary Says:

    Larry/ON

    Appreciate your periodic updates. Thanks.

  4. bruce Says:

    ron

    thanks for recommending Rage on Netflix…….love it……I see Don still refers to this as a bear market rally again in to-day’s comments…..would you agree?…….

  5. Ron/BC Says:

    Bruce
    The 10 year uptrendline from the early 2009 low is still intact. Whether it had a 20% correction or not is irrelevant to me as that is a industry number that is used but doesn’t tell you anything about the major trend. I don’t care if it’s a bull or bear as historically the biggest rallies come in bear markets not bull markets oddly enough. Often caused by extreme short covering after a selloff. Much like the October through December selloff and everyone who was short got blown away once it became obvious of the depth of the selloff. Even now with so many short at 2815 clearing that causes more of a rally from short covering alone. And it’s not like the short sellers want the stock they are simply forced to buy it back again at higher prices. And smart money chases them higher. Only thing I ever cared about is a good technical set up for a short term gain. But this chart shows the uptrendline from early 2016 broke down and after a selloff price is bouncing back to the underside of it and up to the October high of 2940. The chart suggests the end of the rally back is close in time. Would need to see 2940 cleared to suggest a run to 3000. I won’t be betting on that myself. Been busy looking at condo prices and info on the MLS website I get updated daily looking for another good deal. Much easier to make a buck at that than chasing stocks. And now with the weather warm again golfing is back in play. And I get all the condo updates on my phone wherever I go. And yes, RAKE is a funny NETFLIX show for sure…………

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=20&mn=0&dy=0&id=p25565257199&a=579408384

  6. Lee Morris Says:

    Tnx Ron for all your time and expertise…..

  7. Larry/ON Says:

    Re 3 – Your welcome Mary.

  8. Ana Says:

    $SPX $ES

    https://invst.ly/abdjc

    Five-hour chart.

    Thought this would break to the downside on Friday and today. I will give it until tomorrow closing.

    “One Day More” – Les Misérables

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