Tech Talk for Monday June 3rd 2019

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Pre-opening Comments for Monday June 3rd

U.S. equity index futures were lower this morning. S&P 500 futures were down 8 points in pre-opening trade.

Waste Management gained $1.39 to $110.74 after Stifel Nicolaus raised its target price to $120 from $110. In addition, RBC Capital raised its rating on the stock to Outperform from Sector Perform.

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Alphabet (GOOGL) dropped $36.50 to 1070.00 on reports that the company is the subject of an upcoming antitrust probe by the Justice Department.

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FedEx dropped $4.28 to $150.00 on news that China has launched a probe on the company’s delivery practices in China.

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Cypress Semiconductor jumped $4.49 to $22.31 after Infineon offered to purchase the company for $23.85 per share cash. Value of the deal is $10.1 billion.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/05/31/stock-market-outlook-for-june-3-2019/

Note seasonality charts on the S&P 500 Index and Canada’s GDP.

The Bottom Line

Most developed equity markets in the world reached an intermediate peak on or about May 1st. Last week they continued moving lower. Exceptions were strength in equity markets outside of North America and Europe, notably in Emerging markets.

Observations

Technical action by individual S&P 500 stocks remained bearish last week. Number of stocks breaking intermediate resistance totalled 9 while number of stocks breaking support totalled 89. The Up/Down ratio dropped last week for the fifth consecutive week to (196/212=) 0.92 from 1.58.

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/oversold and trending down. See charts near the end of this report

Medium term technical indicators in Canada also moved slightly lower 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) moved lower again last week.

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

Short term political concerns in the U.S. remain elevated. Issues include tariff wars between the U.S., Mexico 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 five S&P 500 companies are scheduled to report this week. To date, 98% of S&P 500 companies have reported quarterly results.

Forecasts for S&P 500 sales and earnings were virtually unchanged last week. According to FactSet, first quarter earnings are expected to decline 0.4% and revenues are expected to increase 5.3%. Second quarter earnings are expected to drop 2.1% and second quarter revenues are expected to increase 4.1% (versus 4.2% last week). Eighty four companies have issued negative second quarter guidance (versus 80 last week) and 26 companies have issued positive guidance (versus 25 last week). Third quarter earnings are expected to increase 0.3% and revenues are expected to increase 4.2%. Fourth quarter earnings are expected to increase 7.2% and fourth quarter revenues are expected to increase 4.6%. For all of 2019, earnings are expected to increase 3.2% and revenues are expected to increase 4.6% (versus 4.7% last week).

 

Economic News This Week

April Construction Spending to be released at 10:00 AM EDT on Monday is expected to increase 0.3% versus a decline of 0.9% in March.

May Manufacturing ISM to be released at 8:30 AM EDT on Monday is expected to increase to 53.0 from 52.8 in April

April Factory Orders to be released at 10:00 AM EDT on Tuesday are expected to drop 1.0% versus a gain of 1.9% in March.

May ADP Employment Report to be released at 8:15 AM EDT on Wednesday is expected to drop to 185,000 from 275,000 in April

May Services ISM to be released at 10:00 AM EDT on Wednesday is expected to remain unchanged from April at 55.5.

Beige Book is released at 2:00 PM EDT on Wednesday.

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

First Quarter U.S. Productivity to be released at 8:30 AM EDT on Thursday is expected to increase 3.5% versus a gain of 3.6% in the fourth quarter.

April U.S. Trade Deficit to be released at 8:30 AM EDT on Thursday is expected to increase to $50.7 billion from $50.0 billion in March.

April Canadian Trade Balance to be released at 8:30 AM EDT on Thursday is expected to improve to a deficit of $2.80 billion from a deficit of $3.21 billion in March.

May Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to drop to 183,000 from 263,000 in April. May Unemployment Rate is expected to remain at 3.6% set in April. May Hourly Earnings are expected to increase 0.3% versus a gain of 0.2% in April.

May Canadian Employment to be released at 8:30 AM EDT on Friday is expected to drop to 7,500 from 106,500 in April. May Unemployment Rate is expected to remain unchanged at 5.7% set in April.

April Wholesale Inventories to be released at 10:00 AM EDT on Friday are expected to increase 0.7% versus a gain of 0.7% 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 31st 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for May 31st 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for May 31st 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: Bearish. No intermediate breakouts. Breakdowns: $LKQ $BF.B $COST $CVX $SLB $BAC $COF $PBCT $NTRS $PRU $FRC $CD $AOS $PPG $VZ $SIVB $AMP $FLR $FB

Editor’s Note: After 10:00, breakouts included YUM , CCI and CNC. Breakdowns included DOW, CE, SYY, RIG, LUV, HAS, CL and SWK.

Franco-Nevada $FNV.CA $FNV moved above 105.04 Cdn. extending an intermediate uptrend.

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Another Canadian gold stock breakout! Semafo $SMF.CA moved above $3.99 extending an intermediate uptrend.

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Natural Gas ETN $UNG moved below $21.44 extending an intermediate downtrend

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Oil Services ETF $OIH moved below $13.13 to a 15 year low extending an intermediate downtrend.

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Hong Kong iShares $EWH moved below $24.80 completing a Head & Shoulders pattern.

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Canadian Bank Equal Weight ETF $ZEB.CA moved below $27.83 setting an intermediate downtrend.

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Bank of Montreal $BMO.CA $BMO, a TSX 60 stock moved below $98.83 Cdn and $73.77 U.S. setting an intermediate downtrend.

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Brookfield Asset Manager $BAM $BAM.A.C, a TSX 60 stock moved below $45.60 U.S. completing a double top pattern

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Manulife Financial $MFC.CA, a TSX 60 stock moved below $22.95 setting an intermediate downtrend.

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Gold ETN $GLD moved above $122.85 setting an intermediate uptrend.

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U.S. Telecom ETF $IYZ moved below $28.46 and $28.32 completing a Head & Shoulders pattern

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TSX Composite Index $TSX.CA moved below 16,111.26 setting an intermediate downtrend.

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Schachter Energy Report

Josef recently released a presentation made last week that summarizes his thoughts on the energy sector. It is available by paid subscription at www.schachterenergyreport.ca Josef continues to take a cautious stance on the sector. Likely timing for launch of the next cyclical move is June/July. Top picks currently are Bonavista Energy (BNP), Grand Tierra Energy (GTE) and Surge Energy (SGY).

 

Keith Richard’s Blog

Keith says, “Bonds are overbought and equities are oversold”. Following is a link:

https://www.valuetrend.ca/bonds-are-overbought-2/

 

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 29.80 from 43.40. Percent changed to intermediate oversold on a move below 40.00 and continues to trend down.

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Bullish Percent Index for S&P 500 stocks dropped last week to 50.40 from 56.40. The Index remains intermediate neutral and continues to trend down.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average dropped last week to 41.18 from 43.48. Percent remains intermediate neutral and trending down.

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Bullish Percent Index for TSX stocks dropped last week to 56.61 from 59.09. The Index remains intermediate neutral and 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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3 Responses to “Tech Talk for Monday June 3rd 2019”

  1. Ron/BC Says:

    Despite the recent rally in $GOLD price needs to clear $1370 to suggest a major reversal has begun. The ratio charts above need to improve a lot.

    https://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=8&mn=0&dy=0&id=p7481741323c&a=579408509

    https://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=20&mn=0&dy=0&id=p9542016472c&a=579408551

  2. Ron/BC Says:

    Gold stocks have a lot of work to do as well to reverse its downtrend. For starters XGD.to needs to breakout over its long term downtrendline AND clear 12.77. The ratio chart above of XGD.to:GLD also needs to turn up.

    GDX needs to clear 25.23 to clear its 2.5 year sideways consolidation channel to suggest an uptrend has begun. The ratio chart above of GDX:GLD also needs to turn up.

    https://stockcharts.com/h-sc/ui?s=XGD.TO&p=D&yr=18&mn=0&dy=0&id=p30552184122&a=579408507

    https://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=13&mn=0&dy=0&id=p54834868422&a=579408537

  3. Ron/BC Says:

    Interest rates have fallen sharply and the U.S. 10YR. Treasury Yield is now approaching the 2017 low support and is very,very oversold. A bounce back in rates from this 2.0 level is likely which would see Bonds sell off.

    https://stockcharts.com/h-sc/ui?s=%24TNX&p=D&yr=3&mn=0&dy=0&id=p05949396490&a=579408365

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