Tech Talk for Monday April 8th 2019

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Pre-opening Comments for Monday April 8th

U.S. equity index futures were lower this morning. S&P 500 futures were down 3 points in pre-opening trade.

General Electric dropped $0.60 to $9.41 after JP Morgan downgraded the stock to Underweight from Neutral.

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Southwest Airlines (LUV $53.25) is expected to open lower after Raymond James downgraded the stock to Market Perform from Outperform.

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Boeing dropped $16.42 to $375.51 after Bank of America downgraded the stock to Neutral from Buy.

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Starbucks (SBUX $75.03) is expected to open lower after UBS downgraded the stock to Neutral from Buy.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/04/05/stock-market-outlook-for-april-8-2019/

Note seasonality charts on the VIX Index, U.S. Energy sector, Non-farm Payrolls and Canadian Employment.

 

WALL STREET RAW RADIO

SATURDAY, APRIL 6, 2019

WITH YOUR HOST, MARK LEIBOVIT

SPECIAL GUESTS:

DON VIALOUX, HARRY BOXER, SINCLAIR NOE AND RALPH CASE 

http://tinyurl.com/y42lrt3r

 

Excerpts from Wall Street Raw by Don Vialoux

North American equity markets continued to move higher last week. The main focus was trade negotiations between the U.S. and China. The Shanghai Composite Index gained another 5% last week. Since the Chinese New Year at the beginning of February, the Shanghai Composite Index has gained 24%.

U.S. equities and ETFs that benefit from an economic recovery in China were notable gainer last week. The base metals ETF (Symbol: PICK) gained 4.7%. The steel ETF (Symbol: SLX) advanced 4.6%.

Precious metal prices and related equities came alive in late trading on Thursday. Seasonal influences by the sector are positive from mid-March to the beginning of June. On Thursday, the Gold Bug Index popped almost 3%. Platinum broke above a double bottom pattern and jumped last week by almost 6%..

Democrats have proposed a cruel tax on U.S. investors. They call it “The Wall Street Act of 2019”. The proposed tax would charge $0.10 on every $100 financial transaction. If enacted, the tax would significantly reduce frequency of transactions by arbitragers and short term traders.

The road to legalization of cannabis in the U.S. continues. Recently, the House Financial Services Committee advanced the proposed SAFE Act. The Act provides a safe harbour from financial regulators by allowing financial institutions to lend to companies in the cannabis industry. However, legislative approval of the proposal is unlikely in the short term.

 

The Bottom Line

U.S. and Canadian equity markets recovered last week. Intermediate momentum indicators for North American equity markets moved higher despite intermediate overbought levels. Indices continued to focus on prospects for a China/U.S. trade deal.

 

Observations

Technical action by individual S&P 500 stocks moved higher last week. Number of stocks breaking intermediate resistance totaled 69 while number of stocks breaking support totaled 6. The Up/Down ratio increased to (304/110=) 2.76 from 2.01.

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

Medium term technical indicators in Canada moved higher 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 tariff wars between the U.S. and China and anti-Trump hearings initiated by the Democrat controlled House of Representatives

Prospects for S&P 500 earnings were reduced again last week. According to FactSet, first quarter earnings are expected to decline 4.2% on a year-over-year basis (versus a decline of 3.9% last week) but revenues are expected to increase 4.7% (down from 4.8% last week). Second quarter earnings are expected to be unchanged (versus a 0.1% increase) and second quarter revenues are expected to increase 4.6%. Third quarter earnings are expected to increase 1.6% (down from 1.7%) and revenues are expected to increase 4.4%. Fourth quarter earnings are expected to increase 8.2% (down from 8.3%) and fourth quarter revenues are expected to increase 4.9%. For all of 2019, earnings are expected to increase 3.6% (down from 3.7%) and revenues are expected to increase 4.9%.

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

February Factory Orders to be released at 10:00 AM EDT on Monday are expected to drop 0.5% versus a gain of 0.1% in January.

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

FOMC meeting minutes are released at 2:00 PM EDT on Wednesday

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

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 211,000 from 202,000 last week.

March Michigan Consumer Sentiment Index to be released at 10:00 AM EDT on Friday is expected to slip to 98.0 from 98.4 in February.

 

Earnings News This Week

Focus this week is on U.S. bank reports released on Friday

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Trader’s Corner

 

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for April 5th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for April 5th 2019

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Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for April 5th 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 comments released on Friday @EquityClock

Nonfarm Payrolls up 0.5% (NSA) In March, slightly weaker than the 0.6% average increase for the month. $MACRO #Economy #Employment

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Technical action by S&P 500 stocks to 10:00: Bullish. Intermediate breakouts: $DG $VIAB $FTI $WY $GWW $FBHS. No breakdowns.

Editor’s Note: After 10:00 AM EDT, breakouts included DISCA DISCK, CF, BWA, OXY, AIG, PRU, TROW, EQT, ILMN, ADS, KHC, DO, IVZ and D. No breakdowns.

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Mid-cap SPDRs $MDY moved above $353.79 extending an intermediate uptrend.

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Nutrien $NTR.CA, a TSX 60 stock moved above $73.03 Cdn. extending an intermediate uptrend

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Calfrac Well Services $CFW.CA moved above $3.70 extending an intermediate uptrend.

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Toromont Industries $TIH.CA moved above $70.22 to an all-time high extending an intermediate uptrend.

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Cenovus $CVE.CA moved above $12.40 extending an intermediate uptrend.

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Mexico ETF $EWW moved above $45.76 extending an intermediate uptrend.

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Canadian Natural Resources $CNQ.CA moved above $38.07 completing a reverse Head & Shoulders pattern.

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#Employment in Canada effectively unchanged (NSA) in March, weaker than the 0.2% average increase for the month. $MACRO #CDNecon #CAD

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George Weston $WN.CA, a TSX 60 stock moved above $97.70 completing a reverse Head & Shoulders pattern.

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Jeff Parent from CastleMoore on BNNBloomberg’s Market Call

Following are links:

 

Market Outlook

https://www.bnnbloomberg.ca/video/jeff-parent-s-market-outlook~1653918

Top Picks

https://www.bnnbloomberg.ca/video/jeff-parent-s-top-picks~1653942

Past Picks

https://www.bnnbloomberg.ca/video/jeff-parent-s-past-picks~1653921

 

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 84.17 from 66.80. Percent remains intermediate overbought.

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Bullish Percent Index for S&P 500 stocks increased last week to 75.20 from 69.00. The Index remains intermediate overbought.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average increased last week to 74.90 from 65.84. Percent remains intermediate overbought.

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Bullish Percent Index for TSX stocks was unchanged last week at 56.97. The Index remains 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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7 Responses to “Tech Talk for Monday April 8th 2019”

  1. Wayne Says:

    Bernie,
    Responding to your question posed Friday about Hi/Lo 52 week highs. I am not aware of any statistical research concerning this condition. But, I’m sure that someone has conducted a study.
    Joe Terranova wrote a popular book “Buy High Sell Higher”in which he details his strategy of buying stocks making 52 week highs. I bot a copy a few years ago and refer to it from time to time. He covers several examples of this strategy in the book.

    Best!

  2. dave/ab Says:

    Hi Bernie

    I have been watching this idea of 52 week high for a while. I feel and have noticed this to be somewhat true. Small cap stocks have more of the ability to keep going up after setting a new 52 week high on pure momentum. Established large or blue-chip stocks tend to hit the 52 week high and then retrace back and then take another run at a later date. Momentum on large CAP often is not as strong unless you are a game changer Example Apple. If you happen to be a game changer most of your momentum is before you are a larger CAP or more 10 billion $ company. If you look at different time frames on the chart you can see the differences on daily, weekly and monthly charts how new highs appear, and the length of time, which I find interesting. Curious what others think of this

  3. Ron/BC Says:

    Bernie
    Here is the same $SPX chart with the New 52 Wk Highs indicator overlaid price. I’ve used the 10 day average of it which is easier to see the trend and is what is usually used to view trends like this. Notice while new highs were being made with the $SPX the 10 M/A of this New Highs indicator was also doing the same in early 2018. BUTTTTTTTT in Aug/Sept/Oct notice how low the number of new highs were with new highs in the $SPX which warned that only a handful of large cap stocks within the $SPX was causing the new highs in the Index, but broad market was weakening. I recall investors in the past wondering why while the market was making new highs none or few of their stocks were doing the same. Right now the indicator is not overly impressive relative to the $SPX which is near new highs again.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=2&mn=0&dy=0&id=p44193620122&a=657157579

  4. Ron/BC Says:

    Here is a chart of the XIU.to (TSX60 Index ETF) Still on a buy signal since early January using the 50,200,20 Modified MACD Indicator with a 20ema. Fairly timely for a long term trend indicator,especially at catching near tops to exit. No need to go through emotion hell and back when using it.

    https://stockcharts.com/h-sc/ui?s=XIU.TO&p=D&yr=6&mn=0&dy=0&id=p96048576936&a=579408596

  5. Bernie Says:

    Wayne, dave/ab, Ron/BC

    I won’t have time to read and follow on your comments & chart or to monitor comments on TTM for a while. Thank you kindly for your replies. My father isn’t doing well. Will be flying to Edmonton tomorrow.

  6. Ron/BC Says:

    Bernie
    All the best………..

  7. dave/ab Says:

    Hi Bernie

    Thinking of you. take care

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