Tech Talk for Monday May 13th 2019

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Pre-opening comments of Monday May 13th

U.S. equity index futures moved lower this morning. S&P 500 futures were down 55 points in pre-opening trade. Index futures responded to a stalemate on trade between the U.S. and China. The Shanghai Composite lost another 1.21% to 2903.71.

Crude oil gained $0.78 to $62.44 after two Saudi oil tankers were attacked near the Strait of Hormuz.

Prudential Financial (PRU $101.27) is expected to open lower after the stock was downgraded to Neutral from Buy.

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FedEx (FDX $178.00) and UPS (UPS $100.63) are expected to open lower after Amazon announced expansion of its Delivery Service Partners Program

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WestJet (WJA $18.52) is expected to open higher after Onex offered to buy the company at $31 per share. Value of the offer is estimated at $5 billion.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/05/11/stock-market-outlook-for-may-13-2019/

Note seasonality chart on Canadian Employment

 

Jon Vialoux on BNN Bloomberg on Friday

Following are links:

Market Outlook

https://www.bnnbloomberg.ca/video/jon-vialoux-s-market-outlook~1681215

Past Picks

https://www.bnnbloomberg.ca/video/jon-vialoux-s-past-picks~1681270

Top Picks

https://www.bnnbloomberg.ca/video/jon-vialoux-s-top-picks~1681271

 

Update on the Seasonal Advantage Fund

As noted in Jon’s comments on BNNBloomberg on Friday, major changes were made to the Fund on May 2nd. Previously, the Fund was fully invested with a focus on higher than average beta equities (e.g. Industrials, Materials, Technology, Emerging Markets). After May 2nd the portfolio shifted to cash (25%), bonds equivalents (25%) and equities with lower than average beta (including Health Care and Consumer Staples). Net result: the Fund avoided most of the downdraft experienced by North American equity markets last week.

 

The Bottom Line

U.S. equity markets moved significantly lower last week despite better than consensus first quarter results released by S&P 500 and Dow Jones Industrial companies. The TSX Composite Index also weakened. Most equity markets around the world passed their seasonal peak.

Observations

Technical action by individual S&P 500 stocks was bearish last week. Number of stocks breaking intermediate resistance totaled 6 while number of stocks breaking support totaled 50. Breakdowns were most notable in the Energy, Industrial, Technology and Utilities sectors. The Up/Down ratio dropped to (277/130=) 2.13 from 2.86.

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 lower last week. They are intermediate neutral and trending down. See charts near the end of this report

Medium term technical indicators in Canada continued to move lower last week. They remain intermediate neutral and are trending down. 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) deteriorated again last week.

Short term technical indicators for Canadian markets and sectors also deteriorated again last week.

Short term political concerns in the U.S. remain elevated. Issues include tariff wars between the U.S. and China and anti-Trump hearings initiated by the Democrat controlled House of Representatives. Release of the Mueller report continues to elevate political rhetoric.

Frequency of S&P 500 first quarter earnings reports are winding down while frequency of first quarter reports by TSX listed companies is peaking. Another 9 S&P 500 companies (including two Dow Jones Industrial company: Cisco and Wal-Mart) are scheduled to report this week. To date, 90% of S&P 500 companies have reported quarterly results.

Prospects for S&P 500 earnings in the first quarter improved again last week thanks.to higher than consensus results released to date. However, estimates beyond the first quarter moved slightly lower again. According to FactSet, first quarter earnings are expected to decline 0.5% on a year-over-year basis (versus a decline of 0.8% last week) but revenues are expected to increase 5.3% (up from 5.2% last week). Second quarter earnings are expected to drop 1.7% (versus a drop of 1.3% last week) and second quarter revenues are expected to increase 4.3%. Sixty five companies issued negative second quarter guidance (versus 56 last week) and 17 companies issued positive guidance (versus 14 last week). Third quarter earnings are expected to increase 0.6% (versus 0.8% last week) and revenues are expected to increase 4.3% (versus 4.4% last week). Fourth quarter earnings are expected to increase 7.4% (versus 7.5% last week) and fourth quarter revenues are expected to increase 4.6% (versus 4.8% last week). For all of 2019, earnings are expected to increase 3.3% (versus 3.4% last week) and revenues are expected to increase 4.7%.

Seasonal influences for most world equity markets reached a seasonal peak on schedule in the first week in May this year.

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Economic News This Week

April Retail Sales to be released at 8:30 AM EDT on Wednesday are expected to increase 0.3% versus a gain of 1.6% in March. Excluding auto sales, April Retail Sales are expected to increase 0.7% versus a gain of 1.2% in March.

May Empire State Manufacturing Survey to be released at 8:30 AM EDT on Tuesday is expected to increase to 10.50 from 10.10 in April.

April Canadian Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.4% versus a gain of 0.7% in March.

April Capacity Utilization to be released at 9:15 AM EDT on Wednesday is expected to remain unchanged from March at 78.8%. April Industrial Production is expected to increase 0.1% versus a decline of 0.1% in March.

March Business Inventories to be released at 10:00 AM EDT on Wednesday are expected to increase 0.2% versus a gain of 0.3% in February.

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to drop to 223,000 from 228,000 last week.

April Housing Starts to be released at 8:30 AM EDT on Thursday are expected to increase 8.0% versus a decline of 0.3% in March.

May Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to increase to 9.5 from 8.5 in April.

May Consumer Sentiment to be released at 10:00 AM EDT on Friday is expected to increase to 97.5 from 97.2 in April.

 

Earnings News This Week

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for May 10th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for May 10th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for May 10th 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: Quietly bearish. No intermediate breakouts. Breakdowns: $SYMC $CNP $GPS.

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TMX Group $X.CA moved above $89.00 to an all-time high extending an intermediate uptrend.

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#Employment in Canada up 187,700 (NSA) in April, or 1.0%, stronger than average increase for this time of year of 0.7%. $MACRO #CDNecon #CAD

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Blackberry $BB.CA, a TSX 60 stock moved below support at $11.58

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Corn ETN $CORN moved below $14.64 extending an intermediate downtrend.

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Technical action by S&P 500 stocks from 10:00 to 12:00: Bearish. No breakouts. Breakdowns: $MTD $ROK $UHS $EXPE $LKQ $ORLY $FTV $EXPD $HPQ $WDC $ATVI

Editor’s Note: After 12:00 Noon, No additional breakdowns. Breakouts included AFL, AMT, MAA and MMC when U.S. equity indices recovered to the close.

Natural Gas ETN $UNG moved above $22.73 setting a short term uptrend. ‘Tis the season for strength to mid-June!

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US Consumer Price Index (#CPI) up 0.5% (NSA) in April, stronger than the average increase for this time of year of 0.4%. $MACRO #Economy #Inflation

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Don Vialoux comment in www.globeinvestor.com on Friday

A comment on Natural Gas prices

Following is a link:

https://www.theglobeandmail.com/investing/markets/etfs/article-its-the-season-to-take-advantage-of-natural-gas-prices-heres-how/

 

S&P 500 Momentum Barometers

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Percent of S&P 500 stocks trading above their 50 day moving average dropped last week to 56.60 from 67.40. Percent changed from intermediate overbought to intermediate neutral on a move below 60 and is trending down.

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Bullish Percent Index for S&P 500 stocks dropped last week to 65.60 from 73.20. The Index is intermediate overbought and trending down.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average dropped last week to 43.28 from 46.19. Percent remains intermediate neutral and trending down.

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Bullish Percent Index for TSX stocks dropped last week to 57.85 from 60.74. The Index changed to intermediate neutral from intermediate overbought on a move below 60 and is trending down.

 

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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14 Responses to “Tech Talk for Monday May 13th 2019”

  1. Ron/BC Says:

    Here is a Daily chart of the $SPX. Price on Thursday and Friday’s close both closed near the high of the day and stayed above 1st price support and the 50ema. This was clearly end of day short covering as today price plunged dramatically early in the day. Price is testing important support at the 2800 area as it has many times before both as support and then resistance. A break below 2800 would likely see another 100 S&P points lower to the Fib 38.2% retracement level at 2725 area. But this 2800 area is the most significant price support on this chart so holding it would be a positive sign. Oscillators are in oversold territory as well so a bounce could be expected off 2800. Just don’t bet your hard earned money on it……….One doesn’t have to be a wild eyed bull or a growling bear. They’re just trades,nothing more………….

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=1&mn=0&dy=0&id=p56117417864&a=582707024

  2. Ron/BC Says:

    Here is a chart of the Gold Stock ETF:XGD.to on the $TSX. I’ve held several hundred shares of this ETF for a week now which to me is a very long time. And I’ve been amazed that I wasn’t stopped out of it with the plunge in the markets. Even Gold stocks can selloff without Gold falling or even with it rising as people sell what they must not just what they want to get rid of. I exited this position this morning as even though price has basically held the 8 month uptrendline through this selloff there are far too many negative technicals to accept and price has just been spinning its wheels at the uptrendline. And using P.O.P.’s rules the stock did not do what I expected it to do which was a bounce off the uptrendline to $11.70 resistance. If price closes above $11.28 and $GOLD can clear $1300 price could run up to resistance. But the seasonal trend is also against it and with all the negative technicals showing there will be much higher odds trades down the road than this. But price is still holding the 8 month uptrendline for anyone wanting to get onboard. Just depends on one’s acceptable level of risk.

    https://stockcharts.com/h-sc/ui?s=XGD.TO&p=D&yr=1&mn=0&dy=0&id=p01911050727&a=579408427

  3. Kam Says:

    Hi Guys,

    It’s about time,for all those who were talking few days ago to buy at top, to buy here 5-6% cheaper with a stop below 2780. I am sure most won’t buy now as it’s all red and they are scared. Way the traders sentiments work!!

    Ron/BC,

    Very good point about support on SPX around here. I bought 2 contracts of MES(same as 100 shares of Spy) and might buy 2 more but don’t know when. Stop below 2780 mentally

  4. Ana Says:

    A few numbers to also watch:

    2786

    2775

  5. kam Says:

    Yes Ana.

    We are at a critical point too. If we break below 2785, we might go into a free fall in heart of 3rd. Just as market nvr pulled back from Dec, it could be free fall with no bounces.

  6. Ron/BC Says:

    Kam

    Here is a chart of the XSP.to with the ZQQ.to overlaid for reference. The 31.25 level is major support on this pullback. A break below could see a similar pullback again. With the 600pt rally from December price of the $SPX has only pulled back 150pts. Could see much more if this support level fails. Note the Fib retracement levels below. Meanwhile there “should be” a bounce off this present support area its testing.

    https://stockcharts.com/h-sc/ui?s=XSP.TO&p=D&yr=1&mn=0&dy=0&id=p06961227935&a=625692185

  7. wsto Says:

    Re#3, looking at the chart posted in #1, last time SPX felt to the 2800 level was mid Oct, and it shot right thru, with a small bounce off fib 38% line, hited 2800 and continued its downfall. Also the MACD/ema chart is rolling over. Sounds a bit risky to go long at the 2800 level?

  8. Kam Says:

    WSTO,

    #7,

    Here is why:- It might work or might not.

    https://imgur.com/eOKfV9h

  9. Ron/BC Says:

    I see the FEAR Index is at 32 now. Time for some to put on the Depends.

    https://money.cnn.com/data/fear-and-greed/

  10. Kam Says:

    Kam Says:
    March 29th, 2019 at 10:16 pm
    Hi Bernie,

    Deposited a brand new base model Honda Civic into TFSA account this week. Just sitting there idling.I was thinking of using it as a LYFT car to make $ but decided not to,lol. Talking of Lyft,here is a beautiful chart with a great buy signal for bag holders.
    https://www.tradingview.com/x/Glg3xlcu/

    I will be a buyer between $33.66-$44.30 of Lyft. Until then it will idle.

    LYFT is coming close a buy point as posted on IPO day. Might take a small position if hit.

    UBER have the same buy target:$17.19-$22.25. Long ways to go.

  11. GARY Says:

    For you Armstrong fans…

    Stocks fell sharply on Monday after China decided to raise tariffs on some U.S. goods as the ongoing trade war between the world’s largest economies intensifies. We can see that our Energy Model peaked the week of March 18th so whenever we see such a divergence of higher prices with declining Energy, that is a warning that the rally is unsustainable. The stochastic has not yet turned negative showing that this is not a major correction at this point in time.

    Cyclically, we may see a temporary low this week as soon as tomorrow. The main support lies at the Weekly level which comes into play at 25370 to 25200. Only a weekly closing below this zone would signal a more pronounced decline down to the 23750 zone.

    Keep in mind that the emphasis on trade disputes is really just the excuse. The market was poised to decline here from a high and that is what we are looking at. The fundamental attached is whatever they can use to explain the move.

    We have the May 23rd European elections coming into play as well.

  12. bruce Says:

    tnx Gary……market is getting oversold……..a dip below 2800 may flush out some traders…

  13. Paula Says:

    Ron/BC
    Thanks for the updates on SPX and XGD. Your charts always give an objective perspective.
    Did you notice that Jack Chan issued a buy on XGD.TO today? Just as you were selling LOL.

    https://stockcharts.com/public/1094070/chartbook/52374540;

    TLT has done well since it was last discussed on this board. May be coming up for a double top soon:
    https://stockcharts.com/public/1094070/chartbook/61320502

    I have been away for a couple of weeks, and not following the market closely, so just catching up…

  14. Ron/BC Says:

    Paula

    Jack as I’ve said before is a very basic technical trader using MACD,trendlines and an RSI. But I sold the XGD.to position after buying it at its uptrendline and holding it for a week. P.O.P. (Phantom of the Pits) who was the top S&P pit trader said after buying a partial position to exit that position if price does not do what you expected it to do. And then if it did you add to that position. Looking at the XGD.to chart you can see price did not ‘bounce’ off that 8 month uptrendline despite $GOLD rallying up to $1300. In fact price actually closed below that uptrendline on Friday and I didn’t exit then as I wasn’t paying attention. I was lucky price didn’t plunge with the broad market today and put me in the red. But as I said the uptrendline is still holding for those that want to get onboard. But over the years I learned to fully appreciate P.O.P.’s rules as if you don’t exit your position when price doesn’t do as expected you begin to rationalize. Just human nature. Then you say,”I’ll just give it more time”. And then price breaks down a little more and you say,”I’ll exit when it comes back to break even”. Then price sells off even more and you say “It’ll come back.” And when it falls even more you’ll say “I can’t sell now as I’ll lose too much money.” So you see the slippery slope we are all on when we start to compromise our original decision to buy with our expectations of positive price action. So now I can focus on better odds trades or just say to hell with it and go golfing without wondering about a questionable position. I don’t have the fear of missing out as it’s much like fishing. You can go fishing anytime and catch fish so aren’t missing anything. I hope you don’t think I’m giving you a lecture but I do like to explain my mindset for anyone reading this. From my experience far too many people lose money in the stockmarket. Having some rules to govern ourselves is critical when dealing with financial investments that tend to affect us emotionally.
    As far as TLT goes I wouldn’t sell this here as price has cleared the $124 resistance level and most technicals are still bullish. Nice uptrendline there too plus a breakout above a 2.5 year channel!

    https://stockcharts.com/h-sc/ui?s=TLT&p=W&yr=12&mn=0&dy=0&id=p31811480510&a=579408667

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