Tech Talk for Tuesday May 21st 2019

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Pre-opening Comments for Tuesday May 21st

U.S. equity index futures were higher this morning. S&P 500 futures were up 14 points in pre-opening trade.

Home Depot slipped $1.20 to $189.75 despite reporting higher than consensus first quarter earnings.

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Autozone gained $22.17 to $1000.00 after reporting higher than consensus fiscal third quarter earnings.

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Kohl’s dropped $5.91 to $57.00 after reporting lower than consensus first quarter sales and earnings.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/05/17/stock-market-outlook-for-may-21-2019/

Note seasonality study and chart on the TSX Composite Index around the U.S. Memorial Day holiday.

 

Technical Scoop

Thank you to David Chapman and www.EnrichedInvesting.com for their weekly comment. Here is a link:

http://enrichedinvesting.com/wp-content/uploads/2019/05/Trade-dispute-disrupts-whipsaw-week-confident-consumer-falling-yuan-golden-divergence.pdf

StockTwits released yesterday @EquityClock

iShares 20 year + Treasury Bond ETF $TLT moved abobe $126.15 extending an intermediate uptrend

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Utilties SPDRs $XLU moved above $59.07 to an all-time high extending an intermediate uptrend.

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The Bottom Line

Most developed equity markets in the world reached an intermediate peak on or about May 1st. Last week they moved slightly lower. Exceptions were the TSX Composite Index and the Australia All Ordinaries Index.

 

Observations

Technical action by individual S&P 500 stocks remained bearish last week. Number of stocks breaking intermediate resistance totaled 19 (including 10 utility stocks) while number of stocks breaking support totaled 33 (notably industrial stocks) The Up/Down ratio dropped last week for the fourth consecutive week to (262/141=) 1.86 from 2.13.

China related equities were notably weaker last week following media comments that U.S./China trade negotiations have stalled.

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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 moved slightly higher last week. They remain intermediate neutral. 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) improved last week.

Short term technical indicators for Canadian markets and sectors also improved slightly 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 and TSX Composite first quarter earnings reports continue to wind down. Another 22 S&P 500 companies (including one Dow Jones Industrial company: Home Depot) are scheduled to report this week. To date, 92% of S&P 500 companies have reported quarterly results.

Forecast for S&P 500 earnings in the first quarter last week was unchanged. Estimates beyond the first quarter moved slightly lower again. According to FactSet, first quarter earnings are expected to decline 0.5% and revenues are expected to increase 5.3%. Second quarter earnings are expected to drop 1.9% (versus a drop of 1.7% last week) and second quarter revenues are expected to increase 4.2% (versus 4.3% last week). Seventy two companies issued negative second quarter guidance (versus 65 last week) and 18 companies issued positive guidance (versus 17 last week). Third quarter earnings are expected to increase 0.5% (versus 0.6% last week) and revenues are expected to increase 4.3%. Fourth quarter earnings are expected to increase 7.3% (versus 7.4% last week) and fourth quarter revenues are expected to increase 4.7% (versus 4.6% last week). For all of 2019, earnings are expected to increase 3.2% (versus 3.3% last week) and revenues are expected to increase 4.7%.

 

Economic News This Week

April Existing Home Sales to be released at 10:00 AM EDT on Tuesday are expected to increase to 5.30 million units from 5.21 million units in March.

March Canadian Retail Sales to be released at 8:30 AM EDT on Wednesday are expected to increase 1.0% versus a gain of 0.8% in February.

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 215,000 from 212,000 last week.

April New Home Sales to be released at 10:00 AM EDT on Thursday are expected to slip to 680,000 units from 692,000 units in March.

April Durable Goods Orders to be released at 8:30 AM EDT on Friday are expected to drop 2.0% versus a gain of 2.8% in March. Excluding transportation orders, April Durable Goods Orders are expected to increase 0.2% versus a gain of 0.4% in March.

 

Selected Earnings News This Week

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for May 17th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for May 17th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for May 17th 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: $DVA $MU

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Constellation Software $CSU.CA, a TSX 60 stock moved above $1,210.00 to an all-time high extending an intermediate uptrend.

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More U.S. Utilities stocks break to new intermediate highs: $AEE $EVRG $PEG

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Keith Richard’s Blog

Keith says, “North American markets may not be the best bet going forward”. Following is a link:

https://www.valuetrend.ca/north-american-markets-may-not-be-the-best-bet-going-forward/

 

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 48.60 from 56.60. Percent remains intermediate neutral and trending down.

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Bullish Percent Index for S&P 500 stocks dropped last week to 59.60 from 65.60. The Index changed to intermediate neutral from intermediate overbought on a move below 60 and continues to trend down.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average increased last week to 50.42 from 43.28. Percent remains intermediate neutral.

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Bullish Percent Index for TSX stocks increased last week to 58.26 from 57.85. 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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