Tech Talk for Monday June 17th 2019

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Pre-opening Comments for Monday June 17th

U.S. equity index futures were higher this morning. S&P 500 futures were up 3 points in pre-opening trade. Equity markets are expected to be quieter than usual prior to news on interest rates from the Federal Reserve to be released on Wednesday.

Array Biopharma jumped $17.87 to $47.46 after Pfizer offered to buy the company for $48.00 per share cash. Value of the deal is $11.4 billion.

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Walt Disney slipped $0.88 to $140.77 after Imperial Capital downgraded the stock to In Line from Outperform.

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Deere (DE $151.51) is expected to open higher after RW Baird upgraded the stock to Outperform from Neutral.

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Keurig Dr. Pepper added $0.52 to $29.15 after BMO Capital upgraded the stock to Outperform from Market Perform

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/06/14/stock-market-outlook-for-june-17-2019/

Note seasonality charts on Retail Trade and Industrial Production.

The Bottom Line

Most developed equity markets in the world reached an intermediate peak on or about May 1st. Exceptions were strength in equity markets outside of North America and Europe (e.g. Argentina, Australia). Last week, most equity markets around the world recorded small gains.

Observations

Technical action by individual S&P 500 stocks remained bearish last week. Number of stocks breaking intermediate resistance totalled 27 while number of stocks breaking support totalled 7. The Up/Down ratio advanced last week to (213/191=) 1.12 from 1.04.

Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) moved slightly higher last week. They are intermediate neutral/overbought. See charts near the end of this report

Medium term technical indicators in Canada also 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) mostly remained unchanged at overbought levels last week.

Short term technical indicators for Canadian markets and sectors also remained unchanged at overbought levels last week.

Short term political concerns in the U.S. remain elevated. Issues include tariff wars between the U.S., Mexico and China, increased tensions with Iran 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 quarterly earnings reports is low again this week. Most companies are in a quiet period prior to release of second quarter results. Only five S&P 500 companies are scheduled to report this week.

Forecasts for S&P 500 sales and earnings moved slightly lower again last week. Strength in the U.S. Dollar Index continues to take its toll. According to FactSet, second quarter earnings are expected to drop 2.5% on a year-over-year basis (versus 2.3% last week) and second quarter revenues are expected to increase 3,9% (versus 4.0% last week). Eighty seven companies have issued negative second quarter guidance and 25 companies have issued positive guidance. Third quarter earnings are expected to be unchanged (versus an increase of 0.2% last week) and revenues are expected to increase 4.0% (versus 4.1% last week). Fourth quarter earnings are expected to increase 6.8% (versus 7.0% last week) and fourth quarter revenues are expected to increase 4.5%. For all of 2019, earnings are expected to increase 3.0% (versus 3.1% last week and revenues are expected to increase 4.5%. First quarter 2020 earnings are expected to increase 10.7% and revenues are expected to increase 6.1%. Second quarter earnings are expected to increase 13.3% and revenue are expected to increase 6.8%.

 

Economic News This Week

May Housing Starts to be released at 8:30 AM EDT on Tuesday are expected to increase to 1.240 million units from 1.235 million units in April

May Canadian Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.2% versus a gain of 0.4% in April.

FOMC Decision on interest rates is released at 2:00 PM EDT on Wednesday is expected to maintain the Fed Fund Rate at 2.5%. Press conference is offered at 2:30 PM EDT.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to slip to 220,000 from 222,000 last week.

June Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to slip to 11.5 from 16.6 in May.

Canadian April Retail Sales to be released at 8:30 AM EDT on Friday are expected to increase 1.0% versus a gain of 1.1% in March. Excluding auto sales, April Retail Sales are expected to increase 0.3% versus a gain of 1.7% in March.

May Existing Home Sales to be released at 10:00 AM EDT on Friday are expected to increase to 5.25 million units from 5.19 million units in April.

 

Earnings News This Week

changes june 17

 

Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for June 14th 2019

spx june 17

Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for June 14th 2019

crb june 17

Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for June 14th 2019

xlk june 17

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

changes june 17

 

StockTwits released on Friday @EquityClock

 

Technical action by S&P 500 stocks to 10:00: Bullish. Intermediate breakouts: $HCP $ALK $CF $NEM $VTR. Breakdowns: $SCHW $AGN

Editor’s Note: After 10:00 AM EDT, intermediate breakouts included DIS and ULTA. Breakdowns included NSC, DO and HP.

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Walt Disney $DIS, a Dow Jones Industrial stock moved above $142.37 to an all-time high extending an intermediate uptrend.

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Sun Life Financial $SLF.CA, a TSX 60 stock moved below $51.87 completing a double top pattern.

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US #Retail Sales up 7.6% (NSA) in May, stronger than the 6.1% increase that is average for this time of year. $MACRO #Economy

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Gildan Activewear $GIL.CA, a TSX 60 stock moved above $51.33 to an all-time high extending an intermediate uptrend.

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TSX Gold Index iShares $XGD.CA moved above $12.80 extending an intermediate uptrend.

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Palladium ETN $PALL moved above $138.68 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 57.11 from 54.71. Percent remains intermediate neutral.

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Bullish Percent Index for S&P 500 stocks increased last week to 62.00 from 57.20. The Index changed to intermediate overbought from intermediate neutral on a move above 60.00.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average increased last week to 51.49 from 48.74. Percent remains intermediate neutral.

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Bullish Percent Index for TSX stocks increased last week to 59.92 from 57.85. Percent 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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